CO Code § 24-30-202.4 (2021)
2021 Colorado Code|Title 24 - Government - State|Article 30 - Department of Personnel - State Administrative Support Services|Part 2 - Accounts and Control|§ 24-30-202.4. Collection of Debts Due the State - Controller's Duties - Creation of Debt Collection Fund - Reciprocal Debt Collection Agreements - Definitions

  The state controller shall advise and assist the various state agencies concerning the collection of debts due the state through such agencies, in accordance with rules promulgated by the executive director of the department of personnel, to achieve the prompt collection of debts due such agencies. The controller may delegate the responsibility for the collection of debts to the central collection services section of the division of finance and procurement, or any successor section, in the department.    Except as otherwise provided for institutions of higher education pursuant to section 23-5-113, and except for those debts under the jurisdiction of the department of revenue referred to in section 24-35-108 (1)(a), under the jurisdiction of the judicial department referred to in section 16-11-101.6, under the jurisdiction of the department of state referred to in section 1-45-111.5, and under the jurisdiction of the department of labor and employment related to overpayment of unemployment insurance benefits and delinquent taxes referred to in section 8-79-102, all state agencies shall refer to the state controller debts due the state that the agency has been unable to collect within thirty days after such debts have become past due, together with the data and information necessary for the controller to institute collection procedures. Debts are not subject to referral pursuant to this subsection (2) if payment arrangements have been made and payments due in accordance with the terms of the arrangements are not delinquent. The controller may grant a waiver to the requirement that a state agency refer debts within such thirty-day period based upon a documented request and justification provided by a state agency, pursuant to rules promulgated by the department of personnel under article 4 of this title 24. A waiver may include extended periods to collect delinquent debts. For accounts where no waiver to assignment has been granted, the controller shall use all state collection capabilities to collect that debt, including the certification of that debt to the department of revenue for offset of that debt against any tax refund due the debtor under the provisions of subsection (3)(a)(II) of this section. No later than one hundred eighty days after receipt by the controller, the controller or the controller's designee shall legally assign all debts that are not claims in process of collection to private counsel or private collection agencies that appear on the list of private counsel or private collection agencies. For the purposes of this section, "claims in process of collection" means any debts on which payments are being made, on which payments have been promised, on which suit has been brought, or any other debts as defined in rules promulgated by the department of personnel pursuant to article 4 of this title 24. The private counsel or private collection agencies included in the list of private counsel or private collection agencies must be selected through competition pursuant to the "Procurement Code", articles 101 to 112 of this title 24. Criteria for selection of the private counsel or private collection agencies shall be developed by the executive director of the department of personnel in consultation with the controller, affected state agencies, and the private collection community.   (2.5) (a) The department of personnel may provide debt collection services, including lottery offsets, limited gaming offsets, and state tax refund offsets, for accounts assigned to central collection services by political subdivisions of the state under contract with central collection services. The provisions of this section governing the time for referral of accounts to private collection agencies, write off, release, or compromise of debts does not govern the debt collection services provided to political subdivisions except as agreed between the department and such political subdivisions or state agencies and institutions.    Upon verification by the appropriate state agency, state-supported institution of higher education, or political subdivision of the state of the amount of a debt due the state, institution, or political subdivision, the state controller may certify to the department of revenue any unpaid debt to be offset against a tax refund due the debtor pursuant to section 39-21-108 (3), C.R.S. Before certifying an unpaid debt to the department of revenue, the state controller shall give written notice to the debtor that the debt will be offset against a tax refund due the debtor and that the debtor may, within thirty days of the postmark of the written notice, request a hearing to dispute the tax refund offset. Such a hearing must be held within thirty calendar days following receipt of the request from the debtor. If the agency, institution, or political subdivision that referred the debt to the controller certifies that the debt was the subject of a final agency determination or judicial decision or that the debt has been reduced to judgment, the debtor may not dispute the validity of the debt at the hearing. If, at the hearing, the dispute is resolved in favor of the debtor, the debtor is entitled to a refund of any money due plus interest, if requested, pursuant to sections 39-21-110 and 39-21-110.5, C.R.S. The executive director of the department of personnel shall promulgate rules, in accordance with article 4 of this title, that specify provisions for adequate notice and opportunity for hearing. The state controller may write off, release, or compromise, any debt as authorized by paragraph (c) of subsection (3) of this section.           Upon referral to the controller of debts due the state, the controller shall institute procedures for collection thereof pursuant to the rules and regulations promulgated therefor by the executive director of the department of personnel. (3) (a) (I) Upon referral to the controller of debts due the state, the controller shall institute procedures for collection thereof pursuant to the rules and regulations promulgated therefor by the executive director of the department of personnel.    Upon verification by the appropriate state agency of the amount of the debt due the state, the controller may certify to the department of revenue any unpaid debt due the state to be offset against a tax refund due the debtor, pursuant to section 39-21-108 (3), C.R.S. Before any unpaid debt is certified to the department of revenue, the controller shall give written notice to the debtor that the debt shall be offset against a tax refund due the debtor and shall notify the debtor that the debtor may, within thirty days of the postmark of the written notice from the controller, request a hearing to dispute the tax refund offset. Such hearing shall be held within thirty calendar days from receipt of the request from the debtor. If the agency that referred the debt to the controller certifies that the debt was the subject of a final agency determination or judicial decision or that the debt has been reduced to judgment, the debtor may not dispute the validity of the debt at the hearing. No money shall be refunded or offset against a tax refund due the debtor if such a hearing is requested until such time as the hearing is completed and a decision is rendered. If at the hearing the dispute is resolved in favor of the debtor, the debtor shall be entitled to a refund of any moneys due plus interest, pursuant to section 39-21-110.5, C.R.S. Provisions for adequate notice and opportunity for hearing shall be made by rules and regulations promulgated by the executive director of the department of personnel. Any debts may be written off, released, or compromised pursuant to paragraph (c) of this subsection (3).       (Deleted by amendment,L. 91, p. 839, § 1, effective January 1, 1992.)    The state controller, with the consent of the state treasurer, is authorized to write off, release, or compromise any debt due the state, but only in accordance with the rules applicable thereto. Such rules may provide delegated authority and criteria for write off, release, and compromise of debts and may include provisions to prohibit the referral of debts for tax offset based on the age or amounts of debts. The rules governing write off, release, and compromise of debts may include provisions authorizing the collection of principal, interest, and other collection fees and costs, including the fees required in subsection (8) of this section.    Proceeds of debts collected by the state controller or by a private counsel or private collection agency shall be accounted for and paid into the fund from which the receivable was derived, and if the fund is no longer in existence, it shall be paid into the general fund. Revenues collected by the controller to pay for state collection activities shall be deposited in the debt collection fund.    There is hereby created in the state treasury a fund to be known as the debt collection fund. Subject to annual appropriation by the general assembly, moneys in the debt collection fund may be used by the controller to offset a shortfall during the fiscal year in the revenue available to pay for the expenses incurred by the controller in collecting debts owed the state. The debt collection fund balance at the end of any fiscal year shall not exceed twenty-five percent of the annual appropriated budget for the collection of debts owed the state. Net revenues collected in excess of twenty-five percent of the debt collection fund balance shall revert to the general fund at the end of each fiscal year.    Notwithstanding any provision of paragraph (e) of this subsection (3) to the contrary, on June 30, 2012, the state treasurer shall deduct two hundred forty-nine thousand four hundred ninety-four dollars from the debt collection fund and transfer such sum to the general fund.    Notwithstanding any provision of this section to the contrary, for the 2011-12 fiscal year the general assembly may appropriate moneys in the debt collection fund created in paragraph (e) of this subsection (3) to the department of revenue for the purpose of modifying the program administered through the "Gambling Payment Intercept Act", part 6 of article 35 of this title, to include the collection of unpaid debts due to the state.     (3.5) (a) (I) The controller shall approve disbursements from state funds from the state's central accounting system in accordance with section 24-30-202 (2). If the controller finds that there is an unpaid balance or debt owing to state agency claimants for any of the following, the controller, upon notice of withholding to the payee, shall withhold the amount of the disbursement that does not exceed the amount of the unpaid balance or debt:    Any moneys withheld for payment of child support debt or child support arrearages pursuant to subparagraph (I) of this paragraph (a) shall be deposited with the state treasurer for disbursement by the department of human services. For all names and amounts certified by the department of human services pursuant to section 26-13-111, C.R.S., the controller shall provide to the department of human services the payees' names and associated amounts deposited with the state treasurer pursuant to this subparagraph (II) and any other identifying information as required by the department of human services.    Any moneys withheld for payment of an unpaid balance of tax, interest, or other charges specified in subparagraph (I) of this paragraph (a) and subject to offset under section 39-21-108 (3), C.R.S., shall be deposited with the state treasurer. For all names and amounts submitted by the executive director of the department of revenue pursuant to section 39-21-114 (10), C.R.S., the controller shall provide to said department the payees' names and associated amounts deposited with the state treasurer pursuant to this subparagraph (III).    Any moneys withheld for payment of an unpaid debt owing to the state pursuant to subparagraph (I) of this paragraph (a) shall be deposited with the state treasurer. For all names and amounts certified by the central collections unit pursuant to this section, the controller shall provide to the central collections unit the payees' names and associated amounts deposited with the state treasurer pursuant to this subparagraph (IV).    All moneys withheld for payment of a student loan division debt pursuant to subparagraph (I) of this paragraph (a) shall be deposited with the state treasurer for disbursement by the state treasurer to the division. For all names and amounts certified by the division pursuant to section 23-3.1-104 (1)(q), C.R.S., the controller shall provide to the division the payees' names and associated amounts deposited with the state treasurer pursuant to this subparagraph (V).    The controller shall deposit with the state treasurer any moneys withheld for payment of unemployment compensation debt pursuant to subparagraph (I) of this paragraph (a), and the state treasurer shall credit the moneys to the unemployment compensation fund. For all names and amounts certified by the division of unemployment insurance pursuant to section 8-79-102 (2), C.R.S., the controller shall provide to the division the payees' names and associated amounts deposited with the state treasurer pursuant to this subparagraph (VI).    Any approved disbursement in excess of the unpaid balance or debt shall be paid to the approved payee.      Any unpaid child support debt as set forth in section 14-14-104, C.R.S., or child support arrearages that are the subject of enforcement services provided pursuant to section 26-13-106, C.R.S., as certified by the department of human services;    Any unpaid balance of tax, accrued interest, or other charges specified in article 21 of title 39, C.R.S., that is subject to offset under section 39-21-108 (3), C.R.S., and owing by the payee according to the records of the controller;    Any unpaid debt owing to the state or any agency thereof by such payee, the amount of which is found to be owing as a result of a final agency determination or the amount of which has been reduced to judgment as certified by the controller;    Any unpaid loan due to the student loan division of the department of higher education as set forth in section 23-3.1-104 (1)(p), C.R.S., found to be owing to such division by such payee as a result of final agency determination; or    Any amount required to be paid to the unemployment compensation fund pursuant to articles 70 to 82 of title 8, C.R.S., the amount of which has been: Determined to be owing as a result of a final agency determination or judicial decision or that has been reduced to judgment by the division of unemployment insurance in the department of labor and employment; and referred to the controller for collection pursuant to section 8-79-102 (2), C.R.S.       In the event that there are debts for unpaid child support, as set forth in section 26-13-111, C.R.S., debts for an unpaid balance of tax, interest, or other charges pursuant to article 21 of title 39, C.R.S., and other debts owing to the state or any agency thereof as set forth in subparagraph (I) of paragraph (a) of this subsection (3.5), the amount withheld pursuant to subparagraph (I) of paragraph (a) of this subsection (3.5) shall be credited to the unpaid debts and shall be applied first to those unpaid debts in the order they appear in this paragraph (b), and any remaining amounts shall be prorated among other unpaid debts withheld pursuant to subparagraph (I) of paragraph (a) of this subsection (3.5) on the basis of the ratio of the amount of each such remaining unpaid debt as compared to the total amount of the remaining unpaid debts.    The controller shall charge for disbursements withheld pursuant to subparagraph (I) of paragraph (a) of this subsection (3.5) and shall credit amounts so collected to the vendor offset implementation fund, which fund is hereby created in the state treasury. The amount of such charges shall be negotiated by the controller with departments using the vendor offset intercept system.          (Deleted by amendment,L. 99, p. 689, § 9, effective August 4, 1999.)    No contract for the collection of state debts under the provisions of this section shall be awarded for a term in excess of that permitted by the provisions of the "Procurement Code", articles 101 to 112 of this title.    Any contract awarded to private counsel or private collection agency shall require that the contractee remain licensed under the contractee's respective occupational licensing statutes or rules during the term of the contract. The contract shall require that a private counsel or private collection agency shall at all times act in compliance with the provisions of the "Colorado Fair Debt Collection Practices Act", article 16 of title 5, and in compliance with any rules promulgated by the executive director.    The controller shall establish specific performance policies and standards for measuring state agency performance in collecting debts due the state.      The department of personnel may add a collection fee to the amount of a debt's principal and accruing interest referred to the state controller pursuant to this section except where other specific statutory authority, requirements under federal programs, or written agreement with the debtor provide otherwise. The department shall determine upon annual review the amount of the collection fee, which shall approximate the reasonable costs incurred by the controller in collecting debts. The collection fee may include a fee to recover the collection costs incurred by either the controller, private counsel, or private collection agencies, but in no case shall the aggregate fee for the controller or private collection agencies exceed eighteen percent and in no case shall the aggregate fee for private counsel exceed twenty-five percent. (8) (a) The department of personnel may add a collection fee to the amount of a debt's principal and accruing interest referred to the state controller pursuant to this section except where other specific statutory authority, requirements under federal programs, or written agreement with the debtor provide otherwise. The department shall determine upon annual review the amount of the collection fee, which shall approximate the reasonable costs incurred by the controller in collecting debts. The collection fee may include a fee to recover the collection costs incurred by either the controller, private counsel, or private collection agencies, but in no case shall the aggregate fee for the controller or private collection agencies exceed eighteen percent and in no case shall the aggregate fee for private counsel exceed twenty-five percent.    The debtor shall be liable for repayment of the total amount of a debt due to the state, including the collection fee plus allowable fees and costs pursuant to paragraph (c) of this subsection (8) and the delinquency charge pursuant to section 24-79.5-102. Any court-ordered award that is insufficient to cover the total amount outstanding shall be applied first to the principal amount owed, then to court costs, then to attorney fees, then to interest, and then to any delinquency charge.    If such a debt due to the state is litigated and the state prevails, in addition to the collection fee, the debtor shall also be liable for the following:   Reasonable attorney fees as may be determined by the court;    Court costs as described in section 13-16-122, C.R.S.; and    Fees incurred by the state's attorney in processing the litigation and collection of any judgment.       If such a debt due to the state is in the form of a check, draft, or order not paid upon presentment and referred to the department of personnel for collection, the department is entitled, in addition to the collection fee, to collect damages as specified in section 13-21-109 (1)(b)(II) and (2)(a), C.R.S.       Except as provided in the "Colorado Fair Debt Collection Practices Act", article 16 of title 5, within five days after the initial communication with a debtor in connection with the collection of any debt, the controller, private counsel, or private collection agency shall, unless the information is contained in the initial communication or the debtor has paid the debt, send the debtor a written notice with the disclosures specified in subsections (9)(a) and (9)(b) of this section. If the disclosures are placed on the back of the notice, the front of the notice shall contain a statement notifying debtors of that fact. The disclosures shall state:   The amount of the debt, including an itemization of any fees assessed as provided for in paragraph (a) of subsection (8) of this section; and    The name of the creditor to whom the debt is owed.         Notwithstanding any other provision of law, and pursuant to 31 U.S.C. sec. 3716 (b) and (h)(1), the department of personnel, at the request of any executive, judicial, or legislative branch agency of the state, state-supported institution of higher education, or political subdivision of the state, may enter into a reciprocal agreement with the United States government to offset: (10) (a) Notwithstanding any other provision of law, and pursuant to 31 U.S.C. sec. 3716 (b) and (h)(1), the department of personnel, at the request of any executive, judicial, or legislative branch agency of the state, state-supported institution of higher education, or political subdivision of the state, may enter into a reciprocal agreement with the United States government to offset:   The claim of any person against the state, including any state tax refund to which the person may be entitled, to any debt of the person owed to the United States government that the United States government has certified as final, due, and owing, with all appeals and legal actions having been waived or exhausted; and    Any nontax claim of any person against the United States government to any liquidated debt of the person owed to the state. Any fees associated with any offset of federal moneys will be deducted by the United States government from the amount of moneys offset, which may then be added to the balance of the debt owed, but any fees associated with any offset of state moneys will not be charged to the United States government.       Notwithstanding any other provision of law, the department of personnel, at the request of any executive, judicial, or legislative branch agency, state-supported institution of higher education, or political subdivision of the state, may enter into a reciprocal agreement with any state to offset:   The claim of any person against the state to any debt of the person owed to any state that has certified the debt as final, due, and owing, with all appeals and legal actions having been waived or exhausted; and    Any claim of any person against any state to any liquidated debt of the person owed to the state.       If multiple creditors have certified liquidated debt against the same person on a claim against the state pursuant to this section, the debts of the state, any state-supported institution of higher education, or any political subdivision of the state shall be credited first in the priority established in paragraph (b) of subsection (3.5) of this section, with the understanding that any state agency or state-supported institution of higher education debt will be paid first before any debt for a political subdivision of the state assigned to central collection services. If there is any balance due the claimant after settling the whole demands of the state, any executive, judicial, or legislative branch agency of the state, any state-supported institution of higher education, and any political subdivision of the state, the balance shall be credited to the liquidated debts certified by the United States government and then to the liquidated debts certified by any other state in the order in which the claims were filed with the state treasurer. If there is a balance due the claimant after satisfaction of all liquidated debts as itemized in this section and any court-ordered payments, the balance shall be paid to the claimant.        Source: L. 75: Entire section added, p. 798, § 2, effective July 1. L. 83: (2) amended, p. 793, § 3, effective June 3. L. 84: (3)(a) and (3)(d) amended and (3)(e) added, p. 1013, § 2, effective April 27. L. 91: (3)(a) amended and (7) added, p. 802, § 1, effective May 24; (2), (3)(a)(I), (3)(b), (3)(d), (3)(e), and (4) amended and (5) and (6) added, p. 839, § 1, effective January 1, 1992. L. 95: (1), (2), and (3)(a) amended, p. 642, § 36, effective July 1. L. 97: (3.5) added, p. 941, § 2, effective July 1. L. 99: (3)(d), (4), and (7) amended, p. 689, § 9, effective August 4. L. 2002: (3)(a)(II) amended, p. 101, § 4, effective August 7. L. 2006: (1), (2), (3)(c), (3)(d), and (5) amended and (2.5), (8), and (9) added, p. 1159, § 2, effective May 25. L. 2010: (2), (8)(a), and (8)(b) amended, (HB 10-1181), ch. 351, p. 1619, § 2, effective June 7; (2) and (3)(a)(II) amended, (SB 10-003), ch. 391, p. 1850, § 28, effective June 9. L. 2011: (3)(f) added, (SB 11-226), ch. 190, p. 733, § 3, effective May 19; (3)(g) added, (SB 11-051), ch. 286, p. 1331, § 1, effective August 10. L. 2012: IP(3.5)(a)(I), (3.5)(a)(I)(E), and (3.5)(a)(VI) amended, (HB 12-1120), ch. 27, p. 107, § 22, effective June 1. L. 2013: (2.5) amended and (10) added, (SB 13-247), ch. 296, p. 1581, § 1, effective August 7. L. 2017: (6) and IP(9) amended, (HB 17-1238), ch. 260, p. 1173, § 20, effective August 9. L. 2018: (2) amended, (HB 18-1047), ch. 155, p. 1096, § 9, effective April 23; (8)(a) amended, (HB 18-1057), ch. 314, p. 1896, § 2, effective July 1, 2019.   Editor's note: (1) Amendments to subsection (3)(a) by Senate Bill 91-15 and Senate Bill 91-140 were harmonized.   (2) Amendments to subsection (2) by Senate Bill 10-003 and House Bill 10-1181 were harmonized.   (3) The effective date for amendments to this section by House Bill 12-1120 (chapter 27, Session Laws of Colorado 2012) was changed from August 8, 2012, to June 1, 2012, by House Bill 12S-1002 (First Extraordinary Session, chapter 2, p. 2432, Session Laws of Colorado 2012.)   Cross references: (1) For the legislative declaration contained in the 1995 act amending subsections (1), (2), and (3)(a), see section 112 of chapter 167, Session Laws of Colorado 1995.   (2) For the legislative declaration in the 2010 act amending subsections (2) and (3)(a)(II), see section 1 of chapter 391, Session Laws of Colorado 2010.   ANNOTATION   The general rule is that the failure to exhaust administrative remedies prior to seeking judicial relief is a jurisdictional defect. This is especially true in cases involving tax matters, and thus, if there are complete, adequate, and speedy administrative remedies available for alleged tax irregularities, a taxpayer must exhaust them. Kendal v. Cason, 791 P.2d 1227 (Colo. App. 1990).   Taxpayers' claim that offsets of their tax refunds against their debts violated the statutory scheme because their debts had not been reduced to judgment could have been raised at administrative hearing. Each of the debts involved was under $500 and the taxpayers were given the opportunity for an administrative hearing before the offset as required by this section. Kendal v. Cason, 791 P.2d 1227 (Colo. App. 1990).