[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7335 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 7335

To amend title 31, United States Code, to allow certain local tax debt 
     to be collected through the reduction of Federal tax refunds.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 10, 2008

Mr. Moran of Virginia introduced the following bill; which was referred 
to the Committee on Oversight and Government Reform, and in addition to 
   the Committee on Ways and Means, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend title 31, United States Code, to allow certain local tax debt 
     to be collected through the reduction of Federal tax refunds.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. EXPANSION OF TAX REFUND REDUCTION PROVISION TO INCLUDE 
              CERTAIN LOCAL TAX DEBT.

    (a) Expansion of Program.--Section 3720A of title 31, United States 
Code (relating to reduction of tax refund by amount of debt) is amended 
by adding at the end the following:
    ``(j) Collection of Past-Due Legally Enforceable Local Government 
Tax Obligations.--
            ``(1) In general.--Upon receiving notice from any eligible 
        State on behalf of a local government, or from any eligible 
        local government, that a named person owes a past-due, legally 
        enforceable tax obligation to the local government, the 
        Secretary of the Treasury shall, under such conditions as may 
        be prescribed by the Secretary, determine whether any amounts, 
        as refunds of Federal taxes paid, are payable to such person. 
        If the Secretary of the Treasury finds that any such amount is 
        payable, he shall--
                    ``(A) reduce such refunds by an amount equal to the 
                amount of such debt;
                    ``(B) pay the amount of such reduction--
                            ``(i) to the State for purposes of payment 
                        by the State to the local government on behalf 
                        of which the State submitted the notice; or
                            ``(ii) to the eligible local government 
                        that submitted the notice;
                    ``(C) notify the State or eligible local government 
                of the person's name, taxpayer identification number, 
                address, and the amount collected; and
                    ``(D) notify the person due the refund that the 
                refund has been reduced by an amount necessary to 
                satisfy a past-due, legally enforceable tax obligation.
            ``(2) Priorities for offset.--
                    ``(A) Any overpayment (as defined in section 6401 
                of the Internal Revenue Code of 1986) by a person shall 
                be reduced pursuant to this subsection--
                            ``(i) after such overpayment is reduced (I) 
                        with respect to any liability for any internal 
                        revenue tax on the part of the person who made 
                        the overpayment; (II) with respect to past-due 
                        support (as defined in section 464(c) of the 
                        Social Security Act); (III) with respect to any 
                        past-due, legally enforceable debt owed to a 
                        Federal agency; and (IV) with respect to any 
                        past-due, legally enforceable State income tax 
                        obligation (as defined in section 6402(e) of 
                        the Internal Revenue Code of 1986); and
                            ``(ii) before such overpayment is credited 
                        to the future liability for any Federal 
                        internal revenue tax of such person.
                    ``(B) If the Secretary receives notice from one or 
                more States or eligible local governments of more than 
                one tax obligation subject to paragraph (1) that is 
                owed by such person to any local government, any 
                overpayment by such person shall be applied against 
                such debts in the order in which such notices were 
                filed.
            ``(3) Notice; consideration of evidence.--
                    ``(A) No State may take action under this 
                subsection (on behalf of a local government) until the 
                local government certifies to the State that the local 
                government--
                            ``(i) has notified the person owing the 
                        past-due, legally enforceable tax obligation by 
                        certified mail with return receipt that the 
                        State (on behalf of the local government) 
                        proposes to take action pursuant to this 
                        section;
                            ``(ii) has given such person at least 60 
                        days to present evidence that all or part of 
                        such liability is not past-due or not legally 
                        enforceable;
                            ``(iii) has considered any evidence 
                        presented by such person and has determined 
                        that an amount of such debt is past-due and 
                        legally enforceable; and
                            ``(iv) has satisfied such other conditions 
                        as the Secretary may prescribe to ensure that 
                        the determination made under clause (iii) is 
                        valid and that the local government has made 
                        reasonable efforts to obtain payment of such 
                        tax obligation.
                    ``(B) No eligible local government may take action 
                under this subsection until the local government--
                            ``(i) has notified the person owing the 
                        past-due, legally enforceable tax obligation by 
                        certified mail with return receipt that the 
                        local government proposes to take action 
                        pursuant to this section;
                            ``(ii) has given such person at least 60 
                        days to present evidence that all or part of 
                        such liability is not past-due or not legally 
                        enforceable;
                            ``(iii) has considered any evidence 
                        presented by such person and has determined 
                        that an amount of such debt is past-due and 
                        legally enforceable; and
                            ``(iv) has satisfied such other conditions 
                        as the Secretary may prescribe to ensure that 
                        the determination made under clause (iii) is 
                        valid and that the local government has made 
                        reasonable efforts to obtain payment of such 
                        tax obligation.
            ``(4) Definition of past-due, legally enforceable tax 
        obligation.--In this subsection, the term `past-due, legally 
        enforceable tax obligation' means a tax debt--
                    ``(A)(i) which resulted from--
                            ``(I) a judgment rendered by a court of 
                        competent jurisdiction which has determined an 
                        amount of tax to be due; or
                            ``(II) a determination after an 
                        administrative hearing which has determined an 
                        amount of tax to be due; and
                    ``(ii) which is no longer subject to judicial 
                review; or
                    ``(B) which resulted from a tax which has been 
                assessed but not collected, the time for 
                redetermination of which has expired, and which has not 
                been delinquent for more than 10 years.
            ``(5) Eligible state.--In this subsection, the term 
        `eligible State' means a State that participates in the 
        procedure applicable under section 6402(e) of the Internal 
        Revenue Code of 1986 (relating to collection of past-due, 
        legally enforceable State income tax obligations).
            ``(6) Eligible local government.--In this subsection, the 
        term `eligible local government' means a municipality described 
        in clause (ii) of section 6103(b)(5)(A) of the Internal Revenue 
        Code of 1986.
            ``(7) Regulations.--The Secretary shall issue regulations 
        prescribing the time and manner in which eligible States (on 
        behalf of local governments) and eligible local governments 
        must submit notices of past-due, legally enforceable tax 
        obligations and the necessary information that must be 
        contained in or accompany such notices. The regulations shall 
        specify the types of taxes and the minimum amount of debt to 
        which the reduction procedure established by paragraph (1) may 
        be applied. The regulations may require eligible States (on 
        behalf of local governments) and eligible local governments to 
        pay a fee to reimburse the Secretary for the cost of applying 
        such procedure, and such fee may be reimbursed by local 
        governments to States in accordance with applicable State law. 
        Any fee paid to the Secretary pursuant to the preceding 
        sentence shall be used to reimburse appropriations which bore 
        all or part of the cost of applying such procedure.
            ``(8) Erroneous payment to state or local government.--Any 
        eligible State or eligible local government receiving notice 
        from the Secretary that an erroneous payment has been made to 
        such State or eligible local government with respect to a 
        notice by the State (on behalf of a local government) or notice 
        by the eligible local government under paragraph (1) shall pay 
        promptly to the Secretary, in accordance with such regulations 
        as the Secretary may prescribe, an amount equal to the amount 
        of such erroneous payment (without regard to whether any other 
        amounts payable to such State or eligible local government 
        under such paragraph have been paid to such State or eligible 
        local government).
    ``(k) Treatment of Payments Made to States or Local Governments.--
The Secretary may provide that, for the purposes of determining 
interest, the payment of any amount withheld under subsection (j) to an 
eligible State (on behalf of a local government) or an eligible local 
government shall be treated as a payment to the person or persons 
making the overpayment.''.
    (b) Disclosure of Certain Information to Agencies of States 
Requesting Refund Offsets for Past-Due, Legally Enforceable Tax 
Obligations.--Paragraph (10) of section 6103(l) of the Internal Revenue 
Code of 1986 is amended--
            (1) in the paragraph heading, by inserting after ``6402'' 
        the following: ``or under subsection (j) of section 3720a of 
        title 31, united states code'';
            (2) in subparagraph (A), by inserting after ``6402'' the 
        following: ``or subsection (j) of section 3720A of title 31, 
        United States Code,''; and
            (3) in subparagraph (B)--
                    (A) by striking ``section 6402 is'' and inserting 
                ``section 6402 or under subsection (j) of section 3720A 
                of title 31, United States Code, is''; and
                    (B) by striking ``section 6402.'' and inserting 
                ``section 6402 or under subsection (j) of section 3720A 
                of title 31, United States Code.''.
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