HB46 Alabama 2013 Session

Summary

Primary Sponsor

Steve ClouseRepresentative

Republican

Session

Regular Session 2013

Title

Debt collection, setoff of debt, collection by counties or municipalities, Sec. 40-18-100 am'd.

Summary

HB46 lets Alabama counties and municipalities offset income tax refunds to collect debts owed to them from administrative or judicial actions.

What This Bill Does

If passed, the bill extends the state’s setoff mechanism to local governments, allowing counties and cities to collect debts by reducing taxpayers' income tax refunds. Debts must be submitted through approved third-party providers or associations, with a minimum amount of $25. The Department of Revenue would transfer the debt amount from the refund to the claimant agency, and any excess refund would go to the taxpayer; funds are held in escrow until the debt is finally determined, and taxpayers receive notice with a 30-day right to contest the setoff.

Who It Affects

• Debtors: individuals who owe money to counties, municipalities, or other claimant agencies and whose income tax refunds may be reduced; they would receive notices and have a 30-day window to contest the setoff.
• Counties and municipalities: local governments that would gain a new method to collect debts through income tax refund setoffs, potentially via fees charged by third-party submitters.

Key Provisions

• Counts the offset of income tax refunds as a method to collect debts owed to counties, municipalities, and specified claimant agencies.
• Defines claimant agencies to include the Alabama Commission on Higher Education, Alabama Department of Human Resources, Alabama Medicaid Agency, Alabama Department of Industrial Relations, the Unified Judicial System, and counties/municipalities via a third-party provider.
• Requires debts to be at least $25 and submitted through an approved third-party provider or a designated entity (e.g., associations like the Association of County Commissions of Alabama or the Alabama League of Municipalities).
• Authorizes third-party providers to charge a reasonable fee, which can be collected as the first amount offset from the debtor’s refund.
• Department of Revenue transfers the amount of the confirmed debt from the debtor’s refund to the claimant agency; any excess refund is sent to the debtor, and funds are held in escrow until the debt is finally determined.
• Requires notice to the debtor about the transfer and provides a 30-day window to apply in writing for a hearing; includes special notice provisions for joint returns.
• Effective date: the act becomes law on the first day of the third month after its passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Debts