2023 Texas Statutes › Government Code › Title 4 - Executive Branch › Subtitle A - Executive Officers › Chapter 403 - Comptroller of Public Accounts › Subchapter B. General Powers and Duties › Section 403.019. Contracts to Collect Out-of-State Debts

Sec. 403.019.  CONTRACTS TO COLLECT OUT-OF-STATE DEBTS.  (a)  The comptroller may contract with a person who is qualified in the business of debt collection to collect on behalf of this state a tax or other amount finally determined to be owed to this state by a person residing outside this state and not known by the agency referring the debt to have sufficient assets in this state to satisfy the debt if the comptroller determines that the collection service to be provided by the collector would be economical and in the best interest of the state.  Subject to Subsection (c), a contract may permit or require the person to pursue a judicial action in a court outside this state to collect a tax or other amount owed.  A contract may also apply to a tax or other amount owed by a person residing outside this state and not known by the agency referring the debt to have sufficient assets in this state to satisfy the debt to a political subdivision of this state, if the comptroller or another state official is required by law to collect the tax or other amount owed for the political subdivision.  No contract authorized under this section may exceed four years in length, except that such contract may provide for an extension for the sole purpose of concluding actions pending at the time of the termination of the contract.  This restriction shall not be construed so as to prohibit a contractor from bidding on a subsequent contract.
(b)  The comptroller must obtain services authorized by this section in the manner provided for the purchase of services by contract under Chapters 2155-2158.  In addition to any other notice required by that Act for inviting bids, the comptroller shall solicit bids for a contract by publishing notice in the Texas Register.
(c)  A contract under this section is not valid unless approved by the attorney general.  The attorney general shall approve a contract if the attorney general determines that the contract complies with the requirements of this section and is in the best interest of the state.  No judicial action by any person on behalf of the state under a contract authorized and approved by this section may be brought unless approved by the attorney general.
(d)  A contract authorized by this section may provide for reasonable compensation for services provided under the contract, including compensation determined by the application of a specified percentage of the total amount collected, including penalties, interest, court costs, or attorney's fees.  If the debt to be collected consists of unpaid taxes, including any penalties, interest, or costs incurred in connection with the taxes, for which tax enforcement funds are available, the comptroller shall pay the compensation for services provided under the contract from those funds.
(e)  An amount collected under a contract authorized by this section shall be deposited in a suspense account established for that purpose in the state treasury.  The comptroller shall pay any compensation provided by the contract that is not paid from other funds under Subsection (d) from the suspense account.  After those amounts have been paid, the remainder shall be transferred to the fund or account to which the amount collected is required to be deposited.  If the amount collected is not required to be deposited to a specific fund or account, the amount shall be transferred to the general revenue fund.
(f)  The comptroller may provide for the imposition of a collection fee not to exceed 15 percent of the amount owed in addition to the other amounts owed to this state to be collected under a contract authorized by this section.  The person who owes the other amounts to be collected under the contract is liable for the collection fee.  The collection fee may be collected under the contract in addition to the other amounts due.  The amount of the collection fee is the amount provided by the contract, whether a specified amount or an amount contingent on the amount collected or other factor, for compensation of the person with whom the contract is made and any court costs or attorney's fees incurred in collecting the amount owed to this state.
(g)  The comptroller shall require a person acting on behalf of the state under a contract authorized by this section to post a bond or other security in an amount the comptroller determines is sufficient to cover all revenue or other property of the state that is expected to come into the possession or control of the person in the course of providing the service.
(h)  A person acting on behalf of the state under a contract authorized by this section does not exercise any of the sovereign power of this state, except that the person is an agent of this state for purposes of determining the priority of a claim that the person is attempting to collect under the contract with respect to the claims of other creditors.
(i)  The comptroller may provide a person acting on behalf of the state under a contract authorized by this section with any confidential information in the custody of the comptroller relating to the debtor that is necessary to the collection of the claim and that the comptroller is not prohibited from sharing under an agreement with another state or the federal government.  A person acting on behalf of the state under a contract authorized by this section, and each employee or agent of the person, is subject to all prohibitions against the disclosure of confidential information obtained from the state in connection with the contract that apply to the comptroller or an employee of the comptroller.  A person acting on behalf of the state under a contract authorized by this section or an employee or agent of the person who discloses confidential information in violation of a prohibition made applicable to the person under this subsection is subject to the same sanctions and penalties that would apply to the comptroller or an employee of the comptroller for that disclosure.
(j)  The comptroller shall require a person acting on behalf of the state under a contract authorized by this section to obtain and maintain insurance coverage adequate to provide reasonable coverage for damages negligently, recklessly, or intentionally caused by the person or the person's agent in the course of collecting a debt under the contract and to protect the state from any liability for those damages.  This state is not liable for and may not indemnify a person acting on behalf of the state under a contract authorized by this section for damages negligently, recklessly, or intentionally caused by the person or the person's agent in the course of collecting a tax or other amount under the contract.
(k)  In addition to any other reasons that may be provided in the contract, a contract authorized under this section may be terminated if a person acting on behalf of the state under such contract, or an employee or agent of the person, is found to be in violation of the federal Fair Debt Collection Practices Act, discloses confidential information to a person not authorized to receive it as provided in Subsection (i) of this section, or performs any act resulting in a final judgment for damages against this state.
(l)  The execution of a contract under this section does not accelerate the imposition of any penalty imposed or to be imposed on the tax or other amount to be collected under the contract.
Added by Acts 1989, 71st Leg., ch. 752, Sec. 1, eff. Jan. 1, 1991.  Amended by Acts 1997, 75th Leg., ch. 165, Sec. 17.191, eff. Sept. 1, 1997.