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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 240
By: Hall
COMMITTEE SUBSTITUTE
An Act relating to income tax refunds; amending 68
O.S. 2011, Section 205.2, as last amended by Sectio n
1, Chapter 280, O.S.L. 2015 (68 O.S. Supp. 2020,
Section 205.2), which relates to claims by specified
entities against income tax refund s; modifying
definition; adding definition; and declaring an
emergency.
BE IT ENACTED BY THE PEOPLE OF TH E STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2011, Section 205.2, as
last amended by Section 1, Chapter 280, O.S.L. 2015 (68 O.S. Supp.
2020, Section 205.2), is amended to read as f ollows:
Section 205.2. A. For purposes of this section, a “qualifying
entity” shall mean a:
1. State agency;
2. Municipal court;
3. District court;
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4. Public housing authority operating pursuant to Section 1062
of Title 63 of the Oklahoma Statutes;
5. District attorney seeking to collect unp aid court-ordered
monetary obligations; or
6. Municipal government, and authorities or trusts with the
municipal government as a beneficiary, seeking to recover expenses
related to emergency medical services. Fo r the purposes of this
section, “emergency medical service” means a service whereby an
authorized agent or employee responds to a call for service with the
intent of providing care, services, transportation or treatment to
any person who may be injured or in need of medical assistance; or
7. The designee of an entity described in paragraphs 1 through
5 6 of this subsection.
B. A qualified entity seeking to collect a debt, unpaid fines
and cost or final judgment of at least Fifty Dollars ($50.00) from
an individual who has filed a state income tax return may file a
claim with the Oklahoma Tax Com mission requesting that the amount
owed to the qualified entity be deducted from any state income tax
refund due to that individual. The claim shall be filed
electronically in a form prescribed by the Tax C ommission and shall
contain information necessary to identify the person owing the debt ,
including the full name and Social Security number of the debtor.
1. Upon receiving a claim from a qualified entity, the Ta x
Commission shall deduct the claim amount, plus collection expenses
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as provided in this sec tion, from the tax refund due to the debtor
and transfer the amount to the qualified entity. Provided, the Tax
Commission need not report available funds of less t han Fifty
Dollars ($50.00).
2. The qualified entity shall send notice to the debtor by
regular mail at the last -known address of the debtor as shown by the
records of the Tax Commission when seeking to collect a debt not
reduced to final judgment. The qu alified entity shall send notice
to the judgment debtor or municipal court defendant by firs t-class
mail at the last-known address of the judgment debtor or municipal
court defendant as shown by the records of the Tax Commission when
seeking to collect a f inal judgment or unpaid municipal fines and
cost. The Tax Commission shall provide in an ag reed electronic
format to the Department of Human Services the amount withheld by
the Tax Commission, the home address and the Social Security number
of the taxpayer. The notice shall state:
a. that a claim has been filed with the Tax Commission
for any portion of the tax refund due to the debtor or
municipal court defendant which would satisfy the
debt, unpaid municipal fines and cost, or final
judgment in full or in part,
b. the basis for the claim,
c. that the Tax Commission has deducted an amount from
the refund and remitted it to such qualified entity,
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d. that the debtor or municipal court defendant has the
right to contest the claim by sending a written
request to the qualified entity for a hearing to
protest the claim, and if the debtor or municipal
court defendant fails to apply for a hearing within
sixty (60) days after the date of the mailing of the
notice, the debtor or municipal court defendant shall
be deemed to have waived his or her opportunity to
contest the claim. Provided, if the claim was filed
by the Department of Human Services, the notice shall
state that the debtor must contest the claim by
sending a written request to the Department within
thirty (30) days after the date of the mailing of the
notice, and
e. that a collection expense o f five percent (5%) of the
gross proceeds owed to the qualified entity has been
charged to the debtor or municipal court defendant and
withheld from the refund.
3. If the qualified entity determines that a refund is due to
the taxpayer, the qualified enti ty shall reimburse the amount
claimed plus the five -percent collection expense to the taxpayer.
The qualified entity may request reimbursement of the two -percent
collection expense retained by the Tax Commi ssion. Such request
must be made within ninety ( 90) days of reimbursement to the
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taxpayer. If timely requested, the Tax Commission shall make such
reimbursement to the qualified entity within ninety (90) days of the
request.
4. In the case of a joint re turn, the notice shall state:
a. the name of any taxpayer named in the return against
whom no debt, no unpaid fines and cost, or final
judgment is claimed,
b. the fact that a debt, unpaid municipal fines and cost,
or final judgment is not claimed against t he taxpayer,
c. the fact that the taxpayer is ent itled to receive a
refund if it is due regardless of the debt, municipal
fines and cost, or final judgment asserted against the
debtor or municipal court defendant,
d. that in order to obtain the refund due, the taxpayer
must apply, in writing, for a heari ng with the
qualified entity named in the notice within sixty (60)
days after the date of the mailing of the notice.
Provided, if the claim was filed by the Depart ment of
Human Services, the notice shall st ate that the
taxpayer must apply, in writing, for a hearing with
the Department within thirty (30) days after the date
of the mailing of the notice, and
e. if the taxpayer against whom no debt, no unpaid
municipal fines and cost, or final judgment is claim ed
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fails to apply in writing for a hearing within sixty
(60) days after the mailing of the notice, the
taxpayer shall have waived his or her right to a
refund. Provided, if the claim was filed by the
Department of Human Services, the notice shall state
that if the taxpayer fails to apply in writing for a
hearing with the Department within thirty (30) days
after the date of the mailing of the notice, the
taxpayer shall have waived his or her right to a
refund.
C. If the qualified entity asserting the claim receives a
written request for a hearing from th e debtor or taxpayer against
whom no debt, no municipal fines and cost, or final judgment is
claimed, the qualified entity shall grant a hearing according to the
provisions of the Administrative Procedures A ct. It shall be
determined at the hearing whethe r the claimed sum is correct or
whether an adjustment to the claim shall be made. Pending final
determination at the hearing of the validity of the debt, unpaid
fines and cost, or final judgment asserted by the qualified entity,
no action shall be taken i n furtherance of the collection of the
debt, unpaid fines and cost, or final judgment. Appeals from
actions taken at the hearing shall be in accordance with the
provisions of the Administrative Procedures A ct.
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D. Upon final determination at a hearing, as provided for in
subsection C of this section, of the amount of the debt, unpaid
fines and cost, or final judgment, or upon failure of the debtor or
taxpayer against whom no debt, no unpaid fines and cost, o r final
judgment is claimed to request such a hea ring, the qualified entity
shall apply the amount of the claim to the debt owed. Any amounts
held by the qualified entity in excess of the final determination of
the debt and collection expense shall be ref unded by the qualified
entity to the taxpayer. H owever, if the tax refund due is
inadequate to pay the collection expense and debt, unpaid fines and
cost, or final judgment, the balance due the qualified entity s hall
be a continuing debt or final judgment until paid in full.
E. Upon receipt of a claim as provided in subsection A of this
section, the Tax Commission shall:
1. Deduct from the refund five percent (5%) of the gross
proceeds owed to the qualified enti ty, and distribute it by
retaining two percent (2%) and transferring three percent (3%) to
the qualified entity, as an expense of collection. The two percent
(2%) retained by the Tax Commission shall be deposited in the
Oklahoma Tax Commission Fund;
2. Transfer the amount of the claimed debt, unp aid fines and
cost, or final judgment or so much thereof as is available to the
qualified entity;
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3. Notify the debtor in writing as to how the refund was
applied; and
4. Refund to the debtor any balance remaini ng after deducting
the collection expense a nd debt, unpaid fines and cost, or final
judgment.
F. The Tax Commission shall deduct from any state tax refund
due to a taxpayer the amount of delinquent state tax and penalty and
interest thereon, which such ta xpayer owes pursuant to any state tax
law prior to payment of such refund.
G. The Tax Commission shall have first priority over all other
qualified entities, when the Tax Commission is collecting a debt,
municipal court fines and cost, or final judgment p ursuant to the
provisions of this section. Subsequent to the Tax Commission
priority, a claim filed by the Department of Human Services for the
collection of child support and spousal support shall have priority
over all other claims filed pursuant to thi s section. Priority in
multiple claims by other qualified entities pursuant to the
provisions of this section shall be in the order in time, in which
the Tax Commission receives the claim from the qualified entities
required by the provisions of subsectio n B of this section.
H. The Tax Commission shall prescribe or approve forms and
promulgate rules and regulations for implementing the provisions of
this section.
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I. The information obtained by a qualified entity from the Tax
Commission pursuant to the pr ovisions of this section shall be used
only to aid in collection of the debt, unpaid fines a nd cost, or
final judgment owed to the qualified entity. Disclosure of the
information for any other purpose shall constitute a misdemeanor.
Any employee of a qua lified entity or person convicted of violat ing
this provision shall be subject to a fine not exceeding One Thousand
Dollars ($1,000.00) or imprisonment in the county jail for a term
not exceeding one (1) year, or both fine and imprisonment and, if
still employed by the qualified entity, shall be di smissed from
employment.
J. The Tax Commission m ay employ the procedures provided by
this section in order to collect a debt owed to the Internal Revenue
Service if the Internal Revenue Service requires such proc edure as a
condition to providing informati on to the Commission concerning
federal income tax.
K. The provisions of this section shall not apply to claims
filed under the provisions of Section 290 6 or Section 5011 of this
title.
SECTION 2. It being immediately necessary for the pr eservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage an d approval.
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58-1-1752 QD 2/9/2021 3:33:19 PM