I 
109TH CONGRESS 
1ST SESSION H. R. 3498 
To amend title 31, United States Code, to allow certain local tax debt 
to be collected through the reduction of Federal tax refunds. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 28, 2005 
Mr. TURNER (for himself, Mr. TOM DAVIS of Virginia, and Mr. MORAN of 
Virginia) introduced the following bill; which was referred to the Com-
mittee on Government Reform, and in addition to the Committee on 
Ways and Means, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To amend title 31, United States Code, to allow certain 
local tax debt to be collected through the reduction of 
Federal tax refunds. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. EXPANSION OF TAX REFUND REDUCTION PRO-
VISION TO INCLUDE CERTAIN LOCAL TAX 
DEBT. 
(a) Section 3720A of title 31, United States Code (re-
lating to reduction of tax refund by amount of debt) is 
amended by adding at the end the following:
‘‘(j) COLLECTION OF PAST-DUE LEGALLY ENFORCE-
ABLE
LOCAL
GOVERNMENT
TAX
OBLIGATIONS.—(1) 
Upon receiving notice from any State on behalf of a local 
government that a named person owes a past-due, legally 
enforceable tax obligation to such local government, the 
Secretary of the Treasury shall, under such conditions as 
may be prescribed by the Secretary, determine whether 
any amounts, as refunds of Federal taxes paid, are pay-
able to such person. If the Secretary of the Treasury finds 
that any such amount is payable, he shall— 
‘‘(A) reduce such refunds by an amount equal 
to the amount of such debt; 
‘‘(B) pay the amount of such reduction to the 
State for purposes of payment by the State to the 
local government on behalf of which the State sub-
mitted the notice; 
‘‘(C) notify the State of the person’s name, tax-
payer identification number, address, and the 
amount collected; and 
‘‘(D) notify the person due the refund that the 
refund has been reduced by an amount necessary to 
satisfy a past-due, legally enforceable tax obligation. 
‘‘(2) PRIORITIES FOR OFFSET.—(A) Any overpay-
ment (as defined in section 6401 of the Internal Revenue
Code of 1986) by a person shall be reduced pursuant to 
this subsection— 
‘‘(i) after such overpayment is reduced (I) with 
respect to any liability for any internal revenue tax 
on the part of the person who made the overpay-
ment; (II) with respect to past-due support (as de-
fined in section 464(c) of the Social Security Act); 
(III) with respect to any past-due, legally enforce-
able debt owed to a Federal agency; and (IV) with 
respect to any past-due, legally enforceable State in-
come tax obligation (as defined in section 6402(e) of 
the Internal Revenue Code of 1986); and 
‘‘(ii) before such overpayment is credited to the 
future liability for any Federal internal revenue tax 
of such person. 
‘‘(B) If the Secretary receives notice from one or 
more States (on behalf of local governments) of more than 
one tax obligation subject to paragraph (1) that is owed 
by such person to any local government, any overpayment 
by such person shall be applied against such debts in the 
order in which such notices were filed. 
‘‘(3) NOTICE; CONSIDERATION OF EVIDENCE.—No 
State may take action under this subsection on behalf of 
a local government until the local government certifies to 
the State that the local government—
‘‘(A) has notified the person owing the past-
due, legally enforceable tax obligation by certified 
mail with return receipt that the State (on behalf of 
the local government) proposes to take action pursu-
ant to this section; 
‘‘(B) has given such person at least 60 days to 
present evidence that all or part of such liability is 
not past-due or not legally enforceable; 
‘‘(C) has considered any evidence presented by 
such person and has determined that an amount of 
such debt is past-due and legally enforceable; and 
‘‘(D) has satisfied such other conditions as the 
Secretary may prescribe to ensure that the deter-
mination made under subparagraph (C) is valid and 
that the local government has made reasonable ef-
forts to obtain payment of such tax obligation. 
‘‘(4) DEFINITION
OF PAST-DUE, LEGALLY EN-
FORCEABLE TAX OBLIGATION.—In this subsection, the 
term ‘past-due, legally enforceable tax obligation’ means 
a tax debt—
‘‘(A)(i) which resulted from—
‘‘(I) a judgment rendered by a court of 
competent jurisdiction which has determined an 
amount of tax to be due; or
‘‘(II) a determination after an administra-
tive hearing which has determined an amount 
of tax to be due; and 
‘‘(ii) which is no longer subject to judicial re-
view; or 
‘‘(B) which resulted from a tax which has been 
assessed but not collected, the time for redetermina-
tion of which has expired, and which has not been 
delinquent for more than 10 years. 
‘‘(5) REGULATIONS.—The Secretary shall issue regu-
lations prescribing the time and manner in which States 
(on behalf of local governments) must submit notices of 
past-due, legally enforceable tax obligations and the nec-
essary information that must be contained in or accom-
pany such notices. The regulations shall specify the types 
of taxes and the minimum amount of debt to which the 
reduction procedure established by paragraph (1) may be 
applied. The regulations may require States (on behalf of 
local governments) to pay a fee to reimburse the Secretary 
for the cost of applying such procedure, and such fee may 
be reimbursed by local governments to States in accord-
ance with applicable State law. Any fee paid to the Sec-
retary pursuant to the preceding sentence shall be used 
to reimburse appropriations which bore all or part of the 
cost of applying such procedure.
‘‘(6) ERRONEOUS PAYMENT TO STATE.—Any State 
receiving notice from the Secretary that an erroneous pay-
ment has been made to such State with respect to a notice 
by the State on behalf of a local government under para-
graph (1) shall pay promptly to the Secretary, in accord-
ance with such regulations as the Secretary may prescribe, 
an amount equal to the amount of such erroneous pay-
ment (without regard to whether any other amounts pay-
able to such State under such paragraph have been paid 
to such State). 
‘‘(k) 
TREATMENT
OF
PAYMENTS
MADE
TO 
STATES.—The Secretary may provide that, for the pur-
poses of determining interest, the payment of any amount 
withheld under subsection (j) to a State (on behalf of a 
local government) shall be treated as a payment to the 
person or persons making the overpayment.’’. 
(b) DISCLOSURE
OF CERTAIN INFORMATION
TO 
AGENCIES OF STATES REQUESTING REFUND OFFSETS 
FOR PAST-DUE, LEGALLY ENFORCEABLE TAX OBLIGA-
TIONS.—Paragraph (10) of section 6103(l) of the Internal 
Revenue Code of 1986 is amended— 
(1) in the paragraph heading, by inserting after 
‘‘6402’’ the following: ‘‘OR UNDER SUBSECTION (j) OF 
SECTION 3720A OF TITLE 31, UNITED STATES CODE’’;
(2) in subparagraph (A), by inserting after 
‘‘6402’’ the following: ‘‘or subsection (j) of section 
3720A of title 31, United States Code,’’; and 
(3) in subparagraph (B)—
(A) by striking ‘‘section 6402 is’’ and in-
serting ‘‘section 6402 or under subsection (j) of 
section 3720A of title 31, United States Code, 
is’’; and 
(B) by striking ‘‘section 6402.’’ and insert-
ing ‘‘section 6402 or under subsection (j) of 
section 3720A of title 31, United States Code.’’.
Æ