Introduced By: Representative Callahan
Date Introduced : February 2, 1999
It is enacted by the General Assembly as follows:
SECTION 1. Section 42-61-7.1 of the General Laws in Chapter 42-61 entitled "State Lottery" is hereby amended to read as follows:
{DEL42-61-7.1. Payment of prizes in excess of six hundred
dollars ($600) -- Setoff for child support debts DEL}{ADD
42-61-7.1. Payment of prizes in excess of six hundred dollars
($600) -- Setoff for child support debts and benefit of overpayments.
-- ADD} Notwithstanding the provisions of section 42-61-7 relating
to assignment of prizes, the following setoff provisions shall
apply to the payment of any prizes or winning ticket in excess
of six hundred dollars ($600).
(1) With respect to a person entitled to receive the prize or winning ticket who has an unpaid child support order(s) arrearage(s) in excess of five hundred ($500), as provided by the department pursuant to section 42-61-7.1(3) {ADD , or owes any sum in excess of five hundred dollars ($500) for benefit overpayments and interest to the department of labor and training determined to be recoverable under the provisions of chapters 39-44, inclusive, of title 28, ADD} the lottery director:
(i) Shall set off against the amount due to that person after state and federal tax withholding an amount up to the balance of the child support arrearage(s), {ADD and benefit overpayments and interest owed to the department of labor and training, ADD} and the director shall make payment of this amount directly to the Rhode Island family court {ADD in the case of child support arrearage(s) ADD} which shall deposit the amount set off into the registry of the family court for a period of forty-five (45) days, or if an application for review has been filed pursuant to section 27-57-1(d), until final disposition of the application until further order of the court {ADD and in the case of benefit overpayments and interest owed the director shall transfer the amounts owed to the department of labor and training ADD}; and
(ii) Shall pay to this person the remaining balance of the prize
or winning ticket amount, if any, after reduction of the amount
set off above for child support {DEL . DEL} {ADD and benefit
overpayments and interest owed. If any instance, the lottery
director has received notice from more than one claimant agency,
the claim for child support arrearage(s) by the department of
human services shall receive first priority and the claim for
benefit overpayments and interest owed by the department of labor
and training the second priority. ADD}
(2) The director shall be discharged of all further liability upon payment of a prize or winning ticket pursuant to this section.
(3) The department of human services shall periodically within each year furnish the director with a list or compilation of names of individuals, together with any other identifying information and in a form that the director shall require, who as of the date of the list or compilation, have an unpaid child support order arrearage in excess of five hundred dollars ($500) as shown on the Rhode Island family court degrees department of human services child support enforcement computer system ("CSE system"). For the purposes of this section, the terms used in this section shall be given the meaning and definitions specified in section 15-16-2.
(4) Any party aggrieved by any action taken under this section may within thirty (30) days of the withholding of the payment by the lottery director seek judicial review in the family court, {ADD in the case of withholding for child support or in the district court in the case of benefit overpayments and interest owed, ADD} which may, in its discretion, issue a temporary order prohibiting the disbursement of funds under this section, pending final adjudication.
[See section 12-1-15 of the General Laws.]
{ADD (5) The department of labor and training shall periodically within each year furnish the director with a list or compilation of names of individuals, together with such identifying information and in such form as the director shall require, who as to the date of the list or compilation, have unpaid benefit overpayments and interest in excess of five hundred dollars ($500) determined to be recoverable under the provisions of chapters 39-44, inclusive of title 28. ADD}
SECTION 2. Sections 44-30.1-1, 44-30.1-3, 44-30.1-4, 44-30.1-5, and 44-30.1-6 of the General Laws in Chapter 44-30.1 entitled "Setoff of Refund of Personal Income Tax" are hereby amended to read as follows:
44-30.1-1. Definitions. -- (a) "Claimant agency" means either:
(1) The department of human services, with respect to past-due support which has been assigned to the department of human services by public assistance and medical assistance recipients or by the department for children and their families, and with respect to past-due support which it is attempting to collect on behalf of any individual not eligible as a public assistance recipient; or
(2) (i) The Rhode Island Higher Education Assistance Authority (RIHEAA), with respect to obligations owed to that agency or to the state of Rhode Island by reason of default or failure to pay student loans, health professions contract advances or scholarships or grant overawards, or
(ii) The Rhode Island Higher Education Assistance Authority (RIHEAA), acting as agent for the United States department of education or other student loan guarantee agencies in other states which have negotiated a reciprocal arrangement with the Rhode Island Higher Education Assistance Authority for the setoff of refunds of personal income taxes against defaulted loan obligations.
(3) The Rhode Island court administrative office, with respect
to court costs, fines, and restitution owed {DEL . DEL} {ADD ;
or ADD}
{ADD (4) The department of labor and training with respect to benefit overpayments and interest owed in excess of five hundred dollars ($500). ADD}
(b) "Court costs owed" means any amount which has been assessed pursuant to a criminal disposition by a judge of the district, family and superior courts, including but not limited to those amounts assessed pursuant to chapters 20 and 25 of title 12 and those amounts assessed pursuant to title 31, which has not been paid and which has been declared delinquent by the administrative judge of the court making the assessment.
(c) "Debtor" means:
(1) any individual who owes past-due support which has been assigned to the department of human services by public assistance and medical assistance recipients or by the department for children and their families, or owes past due support to any individual not eligible as a public assistance recipient;
(2) any individual who has obligations owed to RIHEAA or the state of Rhode Island, the United States department of education or other states and agencies as have negotiated reciprocal agreements with RIHEAA;
(3) any individual who owes court costs or fines to the Superior,
Family and District Courts; {DEL and DEL}
(4) any individual who owes restitution to any victim of any offense
which has been ordered by a Judge of the District, Family and
Superior Courts pursuant to a disposition in a criminal case and
which has been made payable through the administrative office
of state courts pursuant to section 12-19-34 except that obligations
discharged in bankruptcy shall not be included {DEL . DEL} {ADD ;
and ADD}
{ADD (5) any individual who owes any sum in excess of five hundred dollars ($500) for benefit overpayments and interest to the department of labor and training determined to be recoverable under the provisions of chapters 39-44 of title 28. ADD}
(d) "Division" means the department of administration, division of taxation.
(e) "Fines owed" means any amount which has been ordered paid as a penalty in a criminal case by a judge of the District, Family and Superior Courts which has not been paid and which has been declared delinquent by the administrative judge of the court making the assessment.
(f) "Obligation owed" means the total amount owed by any individual on:
(1) Any guaranteed student loan or parent loan for undergraduate students for which RIHEAA has had to pay the guarantee, or for which RIHEAA is acting as agent on behalf of the United States department of education or other state cooperating agencies which have had to pay a guarantee,
(2) Any contract fee advanced by either RIHEAA or the state of Rhode Island on behalf of any individual participating in a health professions educational program for which payment has not been made according to the terms of the contract, and
(3) Any amount of scholarship or grant funds which constitutes an overaward, whether due to error or to the submission of false information, and for which repayment has been demanded by the agency, but which has not been paid.
(g) "Past-due support" means the amount of court-ordered child support or maintenance, child medical support or a spousal support order for a custodial parent having custody of a minor child, which is overdue or otherwise in arrears, regardless of whether there is an outstanding judgment for that amount, and whether the order for the support or maintenance has been established by a court or by an administrative process authorized under the laws of any state.
(h) "Refund" means the Rhode Island income tax refund which the division determines to be due to a taxpayer.
(i) "Restitution owed" means any amount which has been ordered paid pursuant to a criminal case disposition by a judge of the district, family and superior courts pursuant to chapter 19 of title 12, which has not been paid and which has been declared delinquent by the administrative judge of the court making the assessment.
{ADD (j) "Benefit overpayments and interest owed" means any amount in excess of five hundred dollars ($500) determined to be recoverable under the provisions of chapters 39-44, inclusive of title 28. ADD}
44-30.1-3. Collection of debts by setoff. -- Within
a time frame established by the division, the claimant agency
shall supply the information necessary relative to each debtor
owing the state money, and further, shall certify the amount of
debt or debts owed to the state by each debtor. Upon receiving
notice from the claimant agency that a named debtor owes past-due
support, delinquent court costs, fines, or restitution {ADD or benefit
overpayments and interest owed ADD} or has obligations owed as
described in section 44-30.1-1(f) above, the division shall determine
whether any amount, as a refund of taxes paid, is payable to the
debtor, regardless of whether the debtor filed an income tax return
as a married or unmarried individual. If the division determines
that any refund is payable, the division shall setoff the past-due
support, delinquent court costs, fines or restitution {ADD or benefit
overpayments and interest owed ADD} or the obligation owed against
the debtor's refund and shall reduce the debtor's refund by the
amount so determined. The division shall transfer the amount of
past-due support, delinquent court costs, fines or restitution,
{ADD or benefit overpayments and interest owed ADD} or obligation
owed setoff against the debtor's refund to the claimant agency
or in the case of the United States department of education or
other out-of-state agencies, to Rhode Island Higher Education
Assistance Authority (RIHEAA) as its agent. The pendency of judicial
proceedings to contest the setoff shall not stay nor delay the
setoff and transfer of refunds to the claimant agency. If the
amount of the debtor's refund exceeds the amount of the past-due
support, delinquent court costs, fines, or restitution {ADD or benefit
overpayments and interest owed ADD} or obligation owed, the division
shall refund the excess amount to the debtor. If in any instance
with regard to the debtor the division has received notice from
more than one claimant agency, the claim by the bureau of child
support shall receive first priority, the obligations owed shall
have {DEL next DEL} {ADD second ADD} priority {ADD , ADD} and
the delinquent court costs, fines or restitution {ADD shall ADD}
have {DEL the final DEL} {ADD third ADD} priority {DEL . DEL}
{ADD , and the benefit overpayments and interest owed the fourth
priority. ADD}
44-30.1-4. Procedures for setoff and notification of a debtor. -- (a) The division shall prescribe the time or times at which the claimant agency must submit notices of past-due support, the manner in which the notices must be submitted, and the necessary information that must be contained in or accompany the notices. The division shall, from time to time, determine the minimum amount of claim to which the set-off procedure may be applied.
(b) Prior to submitting information relating to a debtor for purposes of setoff of the debtor's income tax refund, the claimant agency shall provide written notice to each debtor, the amount of past-due support, delinquent court costs, fines or restitution {ADD or benefit overpayments and interest owed ADD} or other obligation owed, the intention to setoff the amount owed against the refund, the debtor's right to an administrative hearing to contest the setoff upon written request made within thirty (30) days of the mailing of the notice to the debtor, the debtor's right to judicial review of the administrative hearing decision, the general nature of the potential defenses available to the debtor, and, in general terms, the rights of non-obligated spouses with respect to income tax refunds in the event a joint return is filed.
(c) At the time of the transfer of funds to a claimant agency as provided in this chapter, the division shall notify the debtor whose refund is sought to be setoff that the transfer has been made. The notice shall set forth the name of the debtor, the amount of the past-due support being claimed, the transfer of funds to the claimant agency, the amount of the refund in excess of the amount claimed, if any. In the case of a joint refund, the notice shall also state the name of a taxpayer-spouse named in the return, if any, against whom no past-due support, delinquent court costs, fines or restitution, {ADD or benefit overpayments and interest owed ADD} or obligation owed is claimed, the opportunity to request that the refund be divided between the spouses by filing an amended income tax return in conformance with section 44-30-11 showing each spouse's share of the tax and the contribution to the overpayment of tax resulting in the refund.
(d) Upon receipt of funds transferred from the division, the claimant agency shall deposit and hold the funds in an escrow account until final determination of setoff. Upon final determination of the amount of the claim to be setoff by (1) default for failure to apply for a hearing pursuant to subsection (b), or by (2) decision of the hearing officer pursuant to section 44-30.1-5, the claimant agency shall remove the account of the claim payment from the escrow account, and shall credit the amount to the debtor's obligation. The pendency of judicial proceedings pursuant to section 42-35-15 to review the administrative decision shall not stay nor delay the setoff, transfer, and disbursement of the tax refund in question.
(e) With respect to setoff for past-due support, the division shall provide the debtor's address and social security number to the department of human services.
(f) With respect to setoff for past-due support, the department of human services must inform a non-public assistance custodial parent in advance if it will first apply any setoff amount to be received from the division to satisfy past-due support assigned to it.
44-30.1-5. Hearing procedures. -- (a) If the claimant agency receives written application pursuant to section 44-30.1-4(b) contesting the setoff or the delinquent court costs, fines or restitution or the past-due support {ADD or benefit overpayments and interest owed ADD} or the obligation owed upon which the setoff is based, it shall grant a hearing to the applicant in accordance with chapter 35 of title 42, "administrative procedures".
(b) Appeals from the administrative decisions made by the claimant agency shall be in accordance with chapter 35 of title 42, "administrative procedures"; provided, however, that appeals contesting the setoff of past due support shall be to the family court of Providence County.
(c) In those cases where Rhode Island Higher Education Assistance Authority (RIHEAA) acts as agent for the United States department of education or other out-of-state agencies, Rhode Island Higher Education Assistance Authority (RIHEAA) must obtain appropriate documentation of the obligation owed such as promissory notes, evidence of guarantees paid and such other items as may be necessary to conduct a fair hearing. RIHEAA as agent for other states shall negotiate appropriate reciprocal agreements with those states for purposes of transferring funds and setting charges for cost of services.
44-30.1-6. Priority. -- The division has priority over the claimant agency for collection of tax liabilities. Thereafter, the department of human services shall have priority, to the extent necessary for the enforcement of child support orders issued by any court of competent jurisdiction, over any other claimant agency.
[See section 12-1-15 of the General Laws.]
{ADD Thereafter, the department of labor and training shall have priority, to the extent necessary for the collection of benefit overpayments and interest owed over any other claimant agency. ADD}
SECTION 3. This act shall take effect upon passage.
