Offset of restitution and other State judicial debts against income tax refund

(a)

In general

Section 6402 of the Internal Revenue Code of 1986 (relating to authority to make credits or refunds) is amended by redesignating subsections (f) through (l) as subsections (g) through (m), respectively, and by inserting after subsection (f) the following:

(g)

Collection of past-Due, legally enforceable restitution and other State judicial debts

(1)

In general

In any State which wishes to collect past-due, legally enforceable State judicial debts, the chief justice of the State’s highest court shall designate a single State entity to communicate judicial debt information to the Secretary. In making such designation, the chief justice of the State's highest court shall select, whenever practicable, a relevant State official or agency responsible under State law for collecting the State's income tax or other statewide excise at the time of the designation. Upon receiving notice from a State designated entity that a named person owes a past-due, legally enforceable State judicial debt to or in such State, the Secretary shall, under such conditions as may be prescribed by the Secretary— (A)reduce the amount of any overpayment payable to such person by the amount of such State judicial debt; (B)pay the amount by which such overpayment is reduced under subparagraph (A) to such State designated entity and notify such State designated entity of such person’s name, taxpayer identification number, address, and the amount collected; and (C)notify the person making such overpayment that the overpayment has been reduced by an amount necessary to satisfy a past-due, legally enforceable State judicial debt.

If an offset is made pursuant to a joint return, the notice under subparagraph (B) shall include the names, taxpayer identification numbers, and addresses of each person filing such return.

(2)

Priorities for offset

Any overpayment by a person shall be reduced pursuant to this subsection— (A)after such overpayment is reduced pursuant to— (i)subsection (a) with respect to any liability for any internal revenue tax on the part of the person who made the overpayment; (ii)subsection (c) with respect to past-due support; (iii)subsection (d) with respect to any past-due, legally enforceable debt owed to a Federal agency; and (iv)subsection (e) with respect to any past-due, legally enforceable State income tax obligations; and (B)before such overpayment is credited to the future liability for any Federal internal revenue tax of such person pursuant to subsection (b).

If the Secretary receives notice from 1 or more State designated entities of more than 1 debt subject to paragraph (1) that is owed by such person to such State agency or State judicial branch, any overpayment by such person shall be applied against such debts in the order in which such debts accrued.

(3)

Notice; consideration of evidence

Rules similar to the rules of subsection (e)(4) shall apply with respect to debts under this subsection. (4)

Past-due, legally enforceable State judicial debt

(A)

In general

For purposes of this subsection, the term past-due, legally enforceable State judicial debt means a debt— (i)which resulted from a judgment or sentence rendered by any court or tribunal of competent jurisdiction which— (I)handles criminal or traffic cases in the State; and (II)has determined an amount of State judicial debt to be due; and (ii)which resulted from a State judicial debt which has been assessed and is past-due but not collected. (B)

State judicial debt

For purposes of this paragraph, the term State judicial debt includes court costs, fees, fines, assessments, restitution to victims of crime, and other monies resulting from a judgment or sentence rendered by any court or tribunal of competent jurisdiction handling criminal or traffic cases in the State. (5)

Regulations

The Secretary shall issue regulations prescribing the time and manner in which State designated entities must submit notices of past-due, legally enforceable State judicial debts and the necessary information that must be contained in or accompany such notices. The regulations shall specify the types of State judicial monies and the minimum amount of debt to which the reduction procedure established by paragraph (1) may be applied. The regulations shall require State designated entities to pay a fee to reimburse the Secretary for the cost of applying such procedure. 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. (6)

Erroneous payment to State

Any State designated entity receiving notice from the Secretary that an erroneous payment has been made to such State designated entity 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 designated entity under such paragraph have been paid to such State designated entity).

(b)

Disclosure of return information

Section 6103(l)(10) of the Internal Revenue Code of 1986 (relating to disclosure of certain information to agencies requesting a reduction under subsection (c), (d), (e), or (f) of section 6402) is amended by striking or (f) each place it appears in the text and heading and inserting (f), or (g). (c)

Conforming amendments

(1)Section 6402(a) of the Internal Revenue Code of 1986 is amended by striking and (f) and inserting (f), and (g). (2)Paragraph (2) of section 6402(d) of such Code is amended by striking subsections (e) and (f) and inserting subsections (e), (f), and (g). (3)Paragraph (3)(B) of section 6402(e) of such Code is amended to read as follows:

(B)before such overpayment is— (i)reduced pursuant to subsection (g) with respect to past-due, legally enforceable State judicial debts, and (ii)credited to the future liability for any Federal internal revenue tax of such person pursuant to subsection (b).

(4)Section 6402(h) of such Code, as so redesignated, is amended by striking or (f) and inserting (f), or (g). (5)Section 6402(j) of such Code, as so redesignated, is amended by striking or (f) and inserting , (f), or (g). (d)

Effective date

The amendments made by this Act shall apply to refunds payable for taxable years beginning after December 31, 2010.