I 

111TH CONGRESS 

1ST SESSION H. R. 3060 

To amend the Internal Revenue Code of 1986 to allow certain local tax 

debts to be collected through the reduction of Federal tax refunds. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 25, 2009 

Mr. MORAN of Virginia (for himself, Mr. CONNOLLY of Virginia, Mr. GOODLATTE, Mr. WITTMAN, and Mr. WOLF) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow certain local tax debts to be collected through the reduction 

of Federal tax refunds. 

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

3 SECTION 1. COLLECTION OF PAST-DUE LEGALLY ENFORCE4 ABLE LOCAL GOVERNMENT TAX OBLIGA5 TIONS. 

6 (a) IN GENERAL.—Section 6402 of the Internal Rev7 enue Code of 1986 (relating to authority to make credits 

8 or refunds) is amended by redesignating subsections (g) 


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1 through (l) as subsections (h) through (m), respectively, 

2 and by inserting after subsection (f) the following: 

3 ‘‘(g) COLLECTION OF PAST-DUE LEGALLY EN4 FORCEABLE LOCAL GOVERNMENT TAX OBLIGATIONS.— 

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

6 any State on behalf of a local government, or from 

7 any eligible local government, that a named person 

8 owes a past-due, legally enforceable local government 

9 tax obligation to the local government, the Secretary 

10 shall, under such conditions as may be prescribed by 

11 the Secretary— 

12 ‘‘(A) reduce the amount of any overpay13 ment payable to such person by the amount of 

14 such tax obligation; 

15 ‘‘(B) pay the amount by which such over16 payment is reduced under subparagraph (A)— 

17 ‘‘(i) to such State for purposes of pay18 ment by the State to the local government 

19 on behalf of which such State submitted 

20 the notice; or 

21 ‘‘(ii) to the eligible local government 

22 that submitted the notice; 

23 ‘‘(C) notify the State or eligible local gov24 ernment of the person’s name, taxpayer identiVerDate Nov 24 2008 01:18 Jul 01, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3060.IH H3060

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1 fication number, address, and the amount col2 lected; and 

3 ‘‘(D) notify the person making such over4 payment that the overpayment has been re5 duced by an amount necessary to satisfy a past6 due, legally enforceable tax obligation. 

7 ‘‘(2) PRIORITIES FOR OFFSET.—Any overpay8 ment by a person shall be reduced pursuant to this 

9 subsection— 

10 ‘‘(A) after such overpayment is reduced 

11 pursuant to— 

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

13 liability for any internal revenue tax on the 

14 part of the person who made the overpay15 ment; 

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

17 past-due support; 

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

19 any past-due, legally enforceable debt owed 

20 to a Federal agency; 

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

22 any past-due, legally enforceable State in23 come tax obligation; and 


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1 ‘‘(v) subsection (f) with respect to any 

2 covered unemployment compensation debt; 

3 and 

4 ‘‘(B) before such overpayment is credited 

5 to the future liability for any Federal internal 

6 revenue tax of such person. 

7 If the Secretary receives notice from one or more 

8 States or eligible local governments of more than 

9 one tax obligation subject to paragraph (1) that is 

10 owed by such person to any local government, any 

11 overpayment by such person shall be applied against 

12 such debts in the order in which such notices were 

13 filed. 

14 ‘‘(3) NOTICE; CONSIDERATION OF EVIDENCE.— 

15 ‘‘(A) STATE.—No State may take action 

16 under this subsection (on behalf of a local gov17 ernment) until the local government certifies to 

18 the State that the local government— 

19 ‘‘(i) has notified the person owing the 

20 past-due, legally enforceable local govern21 ment tax obligation by certified mail with 

22 return receipt that the State (on behalf of 

23 the local government) proposes to take ac24 tion pursuant to this section; 


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1 ‘‘(ii) has given such person at least 60 

2 days to present evidence that all or part of 

3 such liability is not past-due or not legally 

4 enforceable; 

5 ‘‘(iii) has considered any evidence pre6 sented by such person and has determined 

7 that an amount of such debt is past-due 

8 and legally enforceable; and 

9 ‘‘(iv) has satisfied such other condi10 tions as the Secretary may prescribe to en11 sure that the determination made under 

12 clause (iii) is valid and that the local gov13 ernment has made reasonable efforts to ob14 tain payment of such tax obligation. 

15 ‘‘(B) ELIGIBLE LOCAL GOVERNMENT.—No 

16 eligible local government may take action under 

17 this subsection until the local government— 

18 ‘‘(i) has notified the person owing the 

19 past-due, legally enforceable local govern20 ment tax obligation by certified mail with 

21 return receipt that the local government 

22 proposes to take action pursuant to this 

23 section; 

24 ‘‘(ii) has given such person at least 60 

25 days to present evidence that all or part of 


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1 such liability is not past-due or not legally 

2 enforceable; 

3 ‘‘(iii) has considered any evidence pre4 sented by such person and has determined 

5 that an amount of such debt is past-due 

6 and legally enforceable; and 

7 ‘‘(iv) has satisfied such other condi8 tions as the Secretary may prescribe to en9 sure that the determination made under 

10 clause (iii) is valid and that the local gov11 ernment has made reasonable efforts to ob12 tain payment of such tax obligation. 

13 ‘‘(4) PAST-DUE, LEGALLY ENFORCEABLE LOCAL

14 GOVERNMENT TAX OBLIGATION.—In this subsection, 

15 the term ‘past-due, legally enforceable local govern16 ment tax obligation’ means a tax debt— 

17 ‘‘(A)(i) which resulted from— 

18 ‘‘(I) a judgment rendered by a court 

19 of competent jurisdiction which has deter20 mined an amount of tax to be due to a 

21 local government; or 

22 ‘‘(II) a determination after an admin23 istrative hearing which has determined an 

24 amount of tax to be due to a local govern25 ment; and 


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1 ‘‘(ii) which is no longer subject to judicial 

2 review; or 

3 ‘‘(B) which resulted from a tax imposed by 

4 a local government which has been assessed but 

5 not collected, the time for redetermination of 

6 which has expired, and which has not been de7 linquent for more than 10 years. 

8 ‘‘(5) ELIGIBLE LOCAL GOVERNMENT.—For pur9 poses of this subsection, the term ‘eligible local gov10 ernment’ means a municipality described in clause 

11 (ii) of section 6103(b)(5)(A). 

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

13 regulations prescribing the time and manner in 

14 which States (on behalf of local governments) and 

15 eligible local governments must submit notices of 

16 past-due, legally enforceable local government tax 

17 obligations and the necessary information that must 

18 be contained in or accompany such notices. The reg19 ulations shall specify the types of taxes and the min20 imum amount of debt to which the reduction proce21 dure established by paragraph (1) may be applied. 

22 The regulations may require States (on behalf of 

23 local governments) and eligible local governments to 

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

25 applying such procedure. Any fee paid to the SecVerDate Nov 24 2008 04:41 Jun 30, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3060.IH H3060

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1 retary pursuant to the preceding sentence shall be 

2 used to reimburse appropriations which bore all or 

3 part of the cost of applying such procedure. 

4 ‘‘(7) ERRONEOUS PAYMENT TO STATE OR

5 LOCAL GOVERNMENT.—Any State or eligible local 

6 government receiving notice from the Secretary that 

7 an erroneous payment has been made to such State 

8 or eligible local government with respect to a notice 

9 by the State (on behalf of a local government) or no10 tice by the eligible local government under para11 graph (1) shall pay promptly to the Secretary, in ac12 cordance with such regulations as the Secretary may 

13 prescribe, an amount equal to the amount of such 

14 erroneous payment (without regard to whether any 

15 other amounts payable to such State or eligible local 

16 government under such paragraph have been paid to 

17 such State or eligible local government).’’. 

18 (b) DISCLOSURE OF RETURN INFORMATION.—Sec19 tion 6103(l)(10) of the Internal Revenue Code of 1986 

20 (relating to disclosure of certain information to agencies 

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

22 section 6402) is amended by striking ‘‘or (f)’’ each place 

23 it appears in the text and heading and inserting ‘‘(f), or 

24 (g)’’. 

25 (c) CONFORMING AMENDMENTS.— 


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

2 Code of 1986 is amended by striking ‘‘and (f)’’ and 

3 inserting ‘‘(f), and (g)’’. 

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

5 Code is amended by striking ‘‘and (f)’’ and inserting 

6 ‘‘, (f), and (g)’’. 

7 (3) Section 6402(h) of such Code, as so redes8 ignated, is amended by striking ‘‘or (f)’’ and insert9 ing ‘‘(f), or (g)’’. 

10 (4) Section 6402(j) of such Code, as so redesig11 nated, is amended by striking ‘‘or (f)’’ and inserting 

12 ‘‘(f), or (g)’’. 

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

14 this section shall apply to refunds payable after the date 

15 of the enactment of this Act. 

Æ 


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