State of Iowa Offset Program. Department of Administrative Services State Accounting Enterprise

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1 State of Iowa Offset Program Department of Administrative Services State Accounting Enterprise

2 Offset Program City Participation -Overview -Participation -Vendor Offsets -Tax Offsets -Questions 2

3 Function of the Offset Program What does the Offset Program do? The State of Iowa recovers delinquent payments owed to state government and local governments. It is accomplished by offsetting (withholding) money from various sources, as allowed by the Code of Iowa, of individuals and vendors. This program is a cost-effective method to ensure individuals in debt to government make payments on their debt, so the burden isn t passed on to the taxpayers. 3

4 Code of Iowa Authority Section 8A.504 of the Code of Iowa directs the establishment of a procedure to set off against any claim owed to a person (from a state agency) any liability that person owed to a state agency. 4

5 State Agency State Agency is defined as: A board, commission, department, or other administrative office or unit of the State of Iowa Any other state entity reported in the Iowa Comprehensive Annual Financial Report (CAFR) Any political subdivision of the state, or an office or unit of a political subdivision 5

6 Offset Timeline Early 1970s Iowa Department of Revenue & Finance holds income tax refunds for liabilities owed to its department Late 1970s income tax refunds allowed to be held for other state agencies In 1989 the program was expanded to payments issued to vendors In 2006 legislation was approved to allow casino winnings to be offset 6

7 Participating Agencies 61 State Agencies 3 Universities Internal Revenue Service 99 County Clerks of Court 13 Counties 225 Cities 13 Community Colleges 59 Municipal Utilities 13 Housing Authorities 7

8 Vendor Offsets

9 Memorandum of Understanding A Memorandum of Understanding (MOU) must be signed and submitted to: Department of Administrative Services State Accounting Enterprise We must receive original signatures Faxed MOU s are not accepted To obtain an MOU, contact the Offset Program at [email protected] 9

10 Appeal Process Prior to submitting the MOU, contact your legal counsel to discuss how your city will conduct the Appeal Process. When a debtor appeals owing a debt or the amount of the debt, remember: Your city is responsible for conducting the appeal. 10

11 Identifying Debt Debt is identified by matching a Social Security Number or Federal Employer Tax Identification Number (provided by the city) against Social Security and Federal Tax ID numbers used by the State of Iowa to issue payments. 11

12 Qualifying Debt Liability or debt means any liquidated sum due and owing to the State of Iowa or any state agency which has accrued through contract, subrogation, tort, operation of law, or any legal theory regardless of whether there is an outstanding judgment for that sum. Before setoff, the amount of a person s liability to a state agency shall be at least $50. 12

13 Sources of Offset Funds Nearly all payments made by the State of Iowa are subject to offset Tax Refunds Vendor payments for Goods and Services Casino Winnings Lottery Winnings Great Treasure Hunt payments 13

14 Offset Program Participation

15 Duties of the Agency 1. Agency must provide list of debtors 2. Agency must notify DAS immediately of any change in the status of the debt 3. Agency must certify the file to DAS semi-annually 4. Agency must send notification to the debtor within ten calendar days from the date which the agency was notified 15

16 Offset Notification Letter The Notification Letter must include the following: 1. City s right to the payment in question 2. City s right to recover the payment through this offset procedure 3. Basis of the city s case in regard to this debt 4. Tax Offset Only - Right of the debtor to request a split of the payments between parties when the payment in question is jointly owned or otherwise owned by two or more people 16

17 Offset Notification Letter Continued 5. Debtor s right to appeal the offset 6. Your city s appeal process procedure 7. Specific number of days debtor has to respond to the notification letter 8. City name and phone number for debtor to contact with questions 17

18 Priority of Offsetting Agencies 1.Department of Revenue 2.Child Support (Dept. Human Services) 3.Judicial Branch 4.College Aid 5.Overpayments (DIA/DHS) 6.All Other Debts - Prioritized based on the liability date provided by the offsetting agency 18

19 Tax Offsets

20 Example of Tax Matches Tax Matches 20

21 Include $7.00 fee in offset amount Offset = Release Enter the total offset. Nothing else! 21

22 Tax Offset Screen 22

23 Notification to City of Offset Match When a city receives notification of a match, it is the city s responsibility to convey the action for each match to the Offset Program. OFFSETTING AGENCY What to do? HOLD THOSE FUNDS! =

24 Confidential Information Transmit offset action instructions by fax. The State of Iowa does not consider secure; do not confidential information except when using Secur . For example, Social Security Numbers 24

25 Requirements for Participation Offsetting City Must: 1. Sign MOU agreement with Dept. of Admin Services 2. Confirm debtor has minimum debt not less than $50 3. Make a good faith attempt to collect the debt 4. Provide debtor file to Department of Admin Services - Information Technology Enterprise 5. Provide & keep current: Name of contact person, Phone and Fax numbers, address and City FEIN 6. Notify vendor/taxpayer of offset through a notification letter that includes your city s appeal process and other required information 25

26 Offset Program Held Payments -Agency Contacts Participant Info Additional information is on our website! das.sae.iowa.gov/offsets 26

27 Offset Team Contacts Peggy (515) Martha (515) Lynn (515) Offset Individuals sometimes become upset with the Offset Team Please don t share our last names! 27