SB169 Alabama 2014 Session

Summary

Primary Sponsor

Jerry L. Fielding

Republican

Co-Sponsors

Tom WhatleyDel MarshGerald H. Allen

Session

Regular Session 2014

Title

Income tax, counties and municipalities authorized to collect debt from income tax refunds, Secs. 40-18-100, 40-18-103 am'd.

Summary

SB169 would let counties and municipalities collect debts by offsetting them against individual income tax refunds, similar to some state agencies today.

What This Bill Does

It amends Alabama law to authorize counties and municipalities to use tax refund setoffs to collect debts from administrative or judicial proceedings. It expands who can participate in setoffs to include counties and municipalities through approved third-party providers or organizations. A minimum debt of $25 applies, and third-party providers may charge a fee to the debtor, with the department transferring up to the claimed debt and holding any excess refund for the debtor. Debtors receive notice and have 30 days to contest the setoff, and funds are held in escrow until the debt’s validity is resolved.

Who It Affects

• Counties and municipalities in Alabama: may submit eligible debts (at least $25) for offset against income tax refunds and may use approved third-party providers or associations to do so.
• Individual taxpayers: could have part of their income tax refund diverted to satisfy a debt; they must be notified and have a 30-day window to contest; any refund beyond the debt is sent to them.
• Third-party providers/organizations: may submit debts on behalf of counties/municipalities, may charge a fee (first offset amount), and are not liable beyond the fee.
• Listed claimant agencies (e.g., Alabama Commission on Higher Education, Alabama Department of Human Resources, Alabama Medicaid Agency, Alabama Department of Industrial Relations, Unified Judicial System): gain authority to participate in refund setoff for debts owed to them.

Key Provisions

• Authorizes counties and municipalities to submit debts for collection via income tax refund setoffs (minimum debt of $25).
• Allows submission through approved third-party providers, the Association of County Commissions of Alabama, or the Alabama League of Municipalities; providers may charge a debtor-facing fee with liability limited to the fee.
• Defines claimant agencies to include both state agencies and local governments acting through approved providers for collection of debts owed from various programs and proceedings.
• Requires notices to debtors, including details of the debt, transfer, and right to a hearing within 30 days; includes joint return provisions.
• Funds transferred to a claimant agency are held in escrow until the debt’s validity is finally determined, with excess refunds returned to the debtor.
• Transfers to the claimant agency cover the amount of the claimed debt; any refund exceeding the debt is sent to the taxpayer.
• Effective date: becomes law the first day of the third month after passage and governor 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