[Congressional Record (Bound Edition), Volume 159 (2013), Part 8]
[Extensions of Remarks]
[Pages 11659-11660]
[From the U.S. Government Publishing Office, www.gpo.gov]




 LEGISLATION TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO PROVIDE FOR 
    OFFSETTING CERTAIN PAST-DUE LOCAL TAX DEBTS AGAINST INCOME TAX 
                              OVERPAYMENTS

                                 ______
                                 

                          HON. JAMES P. MORAN

                              of virginia

                    in the house of representatives

                        Wednesday, July 17, 2013

  Mr. MORAN. Mr. Speaker, today I am proposing legislation to establish 
a program that would mirror the existing law for states. The 
legislation would allow certain types of delinquent local tax debt to 
be collected through the reduction of federal tax refunds. Providing 
local governments access to these needed and due funds is important 
both in principle and for budgetary purposes. In this challenging and 
uncertain economic environment, it is especially important to assist 
cities and counties to collect the taxes they are owed. The 
alternatives would be a reduction in vital services and jobs at a time 
when the government safety net for poor families and the unemployed has 
weakened significantly and increases in poverty in these hard economic 
times. Failure to collect what is due will impose significantly higher 
demands on local governments for police, housing and shelter, food, and 
other vital services. This bill offers a unique opportunity not just to 
provide hundreds of millions of dollars of desperately needed 
assistance at no cost to federal taxpayers but also to protect honest 
taxpayers from an increase in local property taxes. Under this 
legislation, the only cost is to the delinquent taxpayer, who would 
finally be made to pay his or her outstanding tax obligation.
  This proposed program would have no additional cost to the federal 
government. Local governments would pay the federal government the fee 
of $25 for each offset refund. It would alleviate the administrative 
burden to Department of the Treasury by requiring the state taxing 
authority to act as the clearinghouse. Therefore, the client base for 
the Department of the Treasury would not increase.
  This concept of an offset originated as a way to assist states with 
securing child support arrearages. It was expanded to allow states to 
submit other delinquent claims against an individual's federal tax 
return. This program has been very successful for the states. This bill 
would expand its successful idea and concept to local governments in 
all states. Doing so could potentially result in several billion 
dollars annually for local governments by effecting the collection of 
delinquent taxes. Under this legislation, the following order of 
priority for payment of an offset would be: (1) past-due federal income 
tax, (2) past-due state child support, (3) past-due federal government 
agency debt, (4) past-due state income tax, and (5) local government 
tax. The state taxing authority for each state would act as the 
clearinghouse for the local government tax debts, so this will not be 
an additional burden to Financial Management Services (which is a 
division of the United States Department of the Treasury and 
administers the Federal Offset Program). Doing so could potentially 
result in several billion dollars annually for local governments by 
improving the collection of delinquent taxes.
  The bill would instruct the Secretary of the Treasury, upon receiving 
notice from any eligible state on behalf of a local government, that a 
named person owes such local government a past-due, legally enforceable 
tax obligation and provide, consequently, for the reduction of the 
federal tax refunds payable to such person by the amount of such debt. 
That amount would be remitted to the state for payment to the affected 
local government, provide for notification to the state of the 
taxpayer's name, taxpayer identification number, address, and the 
amount collected; and notification of the person due the refund that it 
has been reduced by an amount necessary to satisfy a past-due, legally 
enforceable tax obligation.

[[Page 11660]]

  This bill offers a unique opportunity to provide hundreds of millions 
of dollars of desperately needed assistance at no cost to federal 
taxpayers. For Virginia localities, it is estimated that this bill will 
bring in between 65-70 million dollars in revenue during the first year 
in the program. From its participation in the Federal Offset Program, 
for FY 2008 the Commonwealth of Virginia received over $17 million 
dollars in offsets of federal income tax refunds and an additional $5 
million in offsets of the tax stimulus checks. This legislation earned 
the official support of the National Association of Counties, the 
Government Finance Officers Association, the National League of Cities, 
the Treasurers' Association of Virginia, the United States Conference 
of Mayors, the Association of Public Treasurers of the United States 
and Canada, and the Conference of State Court Administrators.
  This is a good-government bill. If the legislation is passed, it 
would allow federal, state and local government to work together. Good 
citizens, who pay their taxes, will appreciate that the federal 
government and the state government are assisting localities to help 
local government collect from the delinquents. Each citizen should 
share in paying his fair share of taxes.

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