II 

109TH CONGRESS 

2D SESSION S. 3512 

To amend the Internal Revenue Code of 1986 to allow an offset against 

income tax refunds to pay for State judicial debts that are past-due. 

IN THE SENATE OF THE UNITED STATES 

JUNE 14, 2006 

Mr. SMITH (for himself and Mr. SCHUMER) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to allow an 

offset against income tax refunds to pay for State judicial debts that are past-due. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. OFFSET OF STATE JUDICIAL DEBTS AGAINST 

4 INCOME TAX REFUND. 

5 (a) IN GENERAL.—Section 6402 of the Internal Rev6 enue Code of 1986 (relating to authority to make credits 

7 or refunds) is amended by redesignating subsections (f) 

8 through (k) as subsections (g) through (l), respectively, 

9 and by inserting after subsection (e) the following: 


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1 ‘‘(f) COLLECTION OF PAST-DUE, LEGALLY EN2 FORCEABLE STATE JUDICIAL DEBTS.— 

3 ‘‘(1) IN GENERAL.—Upon receiving notice from 

4 any State judicial branch or State agency designated 

5 by the chief justice of the State’s highest court that 

6 a named person owes a past-due, legally enforceable 

7 State judicial debt to or in such State, the Secretary 

8 shall, under such conditions as may be prescribed by 

9 the Secretary— 

10 ‘‘(A) reduce the amount of any overpay11 ment payable to such person by the amount of 

12 such State judicial debt; 

13 ‘‘(B) pay the amount by which such over14 payment is reduced under subparagraph (A) to 

15 such State judicial branch or State agency and 

16 notify such State judicial branch or State agen17 cy of such person’s name, taxpayer identifica18 tion number, address, and the amount collected; 

19 and 

20 ‘‘(C) notify the person making such over21 payment that the overpayment has been re22 duced by an amount necessary to satisfy a past23 due, legally enforceable State judicial debt. 

24 If an offset is made pursuant to a joint return, the 

25 notice under subparagraph (B) shall include the 


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1 names, taxpayer identification numbers, and ad2 dresses of each person filing such return. 

3 ‘‘(2) OFFSET PERMITTED ONLY AGAINST RESI4 DENTS OF STATE SEEKING OFFSET.—Paragraph (1) 

5 shall apply to an overpayment by any person for a 

6 taxable year only if the address shown on the Fed7 eral return for such taxable year is an address with8 in the State of the State judicial branch or State 

9 agency seeking the offset. 

10 ‘‘(3) PRIORITIES FOR OFFSET.—Any overpay11 ment by a person shall be reduced pursuant to this 

12 subsection— 

13 ‘‘(A) after such overpayment is reduced 

14 pursuant to— 

15 ‘‘(i) subsection (a) with respect to any 

16 liability for any internal revenue tax on the 

17 part of the person who made the overpay18 ment; 

19 ‘‘(ii) subsection (c) with respect to 

20 past-due support; 

21 ‘‘(iii) subsection (d) with respect to 

22 any past-due, legally enforceable debt owed 

23 to a Federal agency; and 


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1 ‘‘(iv) subsection (e) with respect to 

2 any past-due, legally enforceable State in3 come tax obligations; and 

4 ‘‘(B) before such overpayment is credited 

5 to the future liability for any Federal internal 

6 revenue tax of such person pursuant to sub7 section (b). 

8 If the Secretary receives notice from 1 or more State 

9 agencies, or from 1 or more State agencies and the 

10 State judicial branch, of more than 1 debt subject 

11 to paragraph (1) that is owed by such person to 

12 such State agency or State judicial branch, any over13 payment by such person shall be applied against 

14 such debts in the order in which such debts accrued. 

15 ‘‘(4) NOTICE; CONSIDERATION OF EVIDENCE.— 

16 Rules similar to the rules of subsection (e)(4) shall 

17 apply with respect to debts under this subsection. 

18 ‘‘(5) PAST-DUE, LEGALLY ENFORCEABLE STATE

19 JUDICIAL DEBT.— 

20 ‘‘(A) IN GENERAL.—For purposes of this 

21 subsection, the term ‘past-due, legally enforce22 able State judicial debt’ means a debt— 

23 ‘‘(i) which resulted from a judgment 

24 or sentence rendered by any court or tri25 bunal of competent jurisdiction which— 


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1 ‘‘(I) handles criminal or traffic 

2 cases in the State; and 

3 ‘‘(II) has determined an amount 

4 of State judicial debt to be due; and 

5 ‘‘(ii) which resulted from a State judi6 cial debt which has been assessed and is 

7 past-due but not collected. 

8 ‘‘(B) STATE JUDICIAL DEBT.—For pur9 poses of this paragraph, the term ‘State judicial 

10 debt’ includes court costs, fees, fines, assess11 ments, restitution to victims of crime, and other 

12 monies resulting from a judgment or sentence 

13 rendered by any court or tribunal of competent 

14 jurisdiction handling criminal or traffic cases in 

15 the State. 

16 ‘‘(6) REGULATIONS.—The Secretary shall issue 

17 regulations prescribing the time and manner in 

18 which State judicial branches and State agencies 

19 must submit notices of past-due, legally enforceable 

20 State judicial debts and the necessary information 

21 that must be contained in or accompany such no22 tices. The regulations shall specify the types of State 

23 judicial monies and the minimum amount of debt to 

24 which the reduction procedure established by para25 graph (1) may be applied. The regulations may reVerDate Aug 31 2005 03:35 Jun 15, 2006 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S3512.IS S3512

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1 quire State judicial branches and State agencies to 

2 pay a fee to reimburse the Secretary for the cost of 

3 applying such procedure. Any fee paid to the Sec4 retary pursuant to the preceding sentence shall be 

5 used to reimburse appropriations which bore all or 

6 part of the cost of applying such procedure. 

7 ‘‘(7) ERRONEOUS PAYMENT TO STATE.—Any 

8 State judicial branch or State agency receiving no9 tice from the Secretary that an erroneous payment 

10 has been made to such State judicial branch or 

11 State agency under paragraph (1) shall pay prompt12 ly to the Secretary, in accordance with such regula13 tions as the Secretary may prescribe, an amount 

14 equal to the amount of such erroneous payment 

15 (without regard to whether any other amounts pay16 able to such State judicial branch or State agency 

17 under such paragraph have been paid to such State 

18 judicial branch or State agency).’’. 

19 (b) DISCLOSURE OF RETURN INFORMATION.—Sec20 tion 6103(l)(10) of the Internal Revenue Code of 1986 

21 (relating to disclosure of certain information to agencies 

22 requesting a reduction under subsection (c), (d), or (e) of 

23 section 6402) is amended by striking ‘‘or (e)’’ each place 

24 it appears in the text and heading and inserting ‘‘(e), or 

25 (f)’’. 


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1 (c) CONFORMING AMENDMENTS.— 

2 (1) Section 6402(a) of the Internal Revenue 

3 Code of 1986 is amended by striking ‘‘and (e)’’ and 

4 inserting ‘‘(e), and (f)’’. 

5 (2) Paragraph (2) of section 6402(d) of such 

6 Code is amended by striking ‘‘subsection (e)’’ and 

7 inserting ‘‘subsections (e) and (f)’’. 

8 (3) Paragraph (3)(B) of section 6402(e) of 

9 such Code is amended to read as follows: 

10 ‘‘(B) before such overpayment is— 

11 ‘‘(i) reduced pursuant to subsection 

12 (f) with respect to past-due, legally en13 forceable State judicial debts, and 

14 ‘‘(ii) credited to the future liability for 

15 any Federal internal revenue tax of such 

16 person pursuant to subsection (b).’’. 

17 (4) Section 6402(g) of such Code, as so redesig18 nated, is amended by striking ‘‘or (e)’’ and inserting 

19 ‘‘(e), or (f)’’. 

20 (5) Section 6402(i) of such Code, as so redesig21 nated, is amended by striking ‘‘or (e)’’ and inserting 

22 ‘‘, (e), or (f)’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this Act shall apply to refunds payable for taxable years 

3 beginning after December 31, 2006. 

Æ 


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