HB5201 93RD GENERAL ASSEMBLY

LRB093 18683 RCE 44410 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB5201

Introduced 02/05/04, by Lou Lang

SYNOPSIS AS INTRODUCED:

30 ILCS 210/5	from Ch. 15, par. 155
30 ILCS 210/10

Amends the Illinois State Collection Act of 1986. Exempts the Department of Human Services from the requirement of referring debts for collection to the Department of Revenue Debt Collection Bureau. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning collection of debts.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois State Collection Act of 1986 is amended by changing Sections 5 and 10 as follows:

(30 ILCS 210/5) (from Ch. 15, par. 155)

Sec. 5. Rules; payment plans; offsets.

(a) Until July 1, 2004 for the Department of Public Aid and July 1, 2005 for Universities and all other State agencies, State agencies shall adopt rules establishing formal due dates for amounts owing to the State and for the referral of seriously past due accounts to private collection agencies, unless otherwise expressly provided by law or rule, except that on and after July 1, 2005, the Department of Employment Security may continue to refer to private collection agencies past due amounts that are exempt from subsection (g). Such procedures shall be established in accord with sound business practices.

(b) Until July 1, 2004 for the Department of Public Aid and July 1, 2005 for Universities and all other State agencies, agencies may enter deferred payment plans for debtors of the agency and documentation of this fact retained by the agency, where the deferred payment plan is likely to increase the net amount collected by the State, except that, on and after July 1, 2005, the Department of Employment Security may continue to enter deferred payment plans for debts that are exempt from subsection (g).

(c) Until July 1, 2004 for the Department of Public Aid and July 1, 2005 for Universities and all other State agencies, State agencies may use the Comptroller's Offset System provided in Section 10.05 of the State Comptroller Act for the collection of debts owed to the agency, except that, on and after July 1, 2005, the Department of Employment Security and the Department of Human Services may continue to use the Comptroller's offset system to collect amounts that are exempt from subsection (g). All debts that exceed $1,000 and are more than 90 days past due shall be placed in the Comptroller's Offset System, unless the State agency shall have entered into a deferred payment plan or demonstrates to the Comptroller's satisfaction that referral for offset is not cost effective.

(d) State agencies shall develop internal procedures whereby agency initiated payments to its debtors may be offset without referral to the Comptroller's Offset System.

(e) State agencies or the Comptroller may remove claims from the Comptroller's Offset System, where such claims have been inactive for more than one year.

(f) State agencies may use the Comptroller's Offset System to determine if any State agency is attempting to collect debt from a contractor, bidder, or other proposed contracting party.

(g) Beginning July 1, 2004 for the Departments of Public Aid and Employment Security and July 1, 2005 for Universities and other State agencies, State agencies shall refer to the Department of Revenue Debt Collection Bureau (the Bureau) all debt to the State, provided that the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue.

(h) The Department of Public Aid shall be exempt from the requirements of this Section with regard to child support debts, the collection of which is governed by the requirements of Title IV, Part D of the federal Social Security Act. The Department of Public Aid may refer child support debts to the Bureau, provided that the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue. The Bureau shall use all legal means available to collect child support debt, including those authorizing the Department of Revenue to collect debt and those authorizing the Department of Public Aid to collect debt. All such referred debt shall remain an obligation under the Department of Public Aid's Child Support Enforcement Program subject to the requirements of Title IV, Part D of the federal Social Security Act, including the continued use of federally mandated enforcement remedies and techniques by the Department of Public Aid.

(h-1) The Department of Employment Security is exempt from subsection (g) with regard to debts to any federal account, including but not limited to the Unemployment Trust Fund, and penalties and interest assessed under the Unemployment Insurance Act. The Department of Employment Security may refer those debts to the Bureau, provided the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue. The Bureau shall use all legal means available to collect the debts, including those authorizing the Department of Revenue to collect debt and those authorizing the Department of Employment Security to collect debt. All referred debt shall remain an obligation to the account to which it is owed.

(h-2) The Department of Human Services is exempt from subsection (g) with regard to all debts. The Department of Human Services may refer those debts to the Bureau, provided the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue. The Bureau shall use all legal means available to collect the debts, including those authorizing the Department of Revenue to collect debt and those authorizing the Department of Human Services to collect debt. All referred debt shall remain an obligation to the account to which it is owed.

(i) All debt referred to the Bureau for collection shall remain the property of the referring agency. The Bureau shall collect debt on behalf of the referring agency using all legal means available, including those authorizing the Department of Revenue to collect debt and those authorizing the referring agency to collect debt.

(j) No debt secured by an interest in real property granted by the debtor in exchange for the creation of the debt shall be referred to the Bureau. The Bureau shall have no obligation to collect debts secured by an interest in real property.

(k) Beginning July 1, 2003, each agency shall collect and provide the Bureau information regarding the nature and details of its debt in such form and manner as the Department of Revenue shall require.

(l) For all debt accruing after July 1, 2003, each agency shall collect and transmit such debtor identification information as the Department of Revenue shall require.

(Source: P.A. 92-404, eff. 7-1-02; 93-570, eff. 8-20-03.)

(30 ILCS 210/10)

Sec. 10. Department of Revenue Debt Collection Bureau to assume collection duties.

(a) The Department of Revenue's Debt Collection Bureau shall serve as the primary debt collecting entity for the State and in that role shall collect debts on behalf of agencies of the State. All debts owed the State of Illinois shall be referred to the Bureau, subject to such limitations as the Department of Revenue shall by rule establish. The Bureau shall utilize the Comptroller's offset system and private collection agencies, as well as its own collections personnel. The Bureau shall collect debt using all legal authority available to the Department of Revenue to collect debt and all legal authority available to the referring agency.

(b) The Bureau shall have the sole authority to let contracts with persons specializing in debt collection for the collection of debt referred to and accepted by the Bureau. Any contract with the debt collector shall specify that the collector's fee shall be on a contingency basis and that the debt collector shall not be entitled to collect a contingency fee for any debt collected through the efforts of any State offset system.

(c) The Department of Revenue shall adopt rules for the certification of debt from referring agencies and shall adopt rules for the certification of collection specialists to be employed by the Bureau.

(d) The Department of Revenue shall adopt rules for determining when a debt referred by an agency shall be deemed by the Bureau to be uncollectible.

(e) Once an agency's debt is deemed by the Bureau to be uncollectible, the Bureau shall return the debt to the referring agency which shall then write the debt off as uncollectible or return the debt to the Bureau for additional collection efforts. The Bureau shall refuse to accept debt that has been deemed uncollectible absent factual assertions from the referring agency that due to circumstances not known at the time the debt was deemed uncollectible that the debt is worthy of additional collection efforts.

(f) For each debt referred, the State agency shall retain all documents and records relating to or supporting the debt. In the event a debtor shall raise a reasonable doubt as to the validity of the debt, the Bureau may in its discretion refer the debt back to the referring agency for further review and recommendation.

(g) The Department of Public Aid shall be exempt from the requirements of this Section with regard to child support debts, the collection of which is governed by the requirements of Title IV, Part D of the federal Social Security Act. The Department of Public Aid may refer child support debts to the Bureau, provided that the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue. The Bureau shall use all legal means available to collect child support debt, including those authorizing the Department of Revenue to collect debt and those authorizing the Department of Public Aid to collect debt. All such referred debt shall remain an obligation under the Department of Public Aid's Child Support Enforcement Program subject to the requirements of Title IV, Part D of the federal Social Security Act, including the continued use of federally mandated enforcement remedies and techniques by the Department of Public Aid.

(g-1) The Department of Employment Security is exempt from subsection (a) with regard to debts to any federal account, including but not limited to the Unemployment Trust Fund, and penalties and interest assessed under the Unemployment Insurance Act. The Department of Employment Security may refer those debts to the Bureau, provided the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue. The Bureau shall use all legal means available to collect the debts, including those authorizing the Department of Revenue to collect debt and those authorizing the Department of Employment Security to collect debt. All referred debt shall remain an obligation to the account to which it is owed.

(g-2) The Department of Human Services is exempt from subsection (a) with regard to all debts. The Department of Human Services may refer those debts to the Bureau, provided the debt satisfies the requirements for referral of delinquent debt as established by rule by the Department of Revenue. The Bureau shall use all legal means available to collect the debts, including those authorizing the Department of Revenue to collect debt and those authorizing the Department of Human Services to collect debt. All referred debt shall remain an obligation to the account to which it is owed.

(h) The Debt Collection Fund is created as a special fund in the State treasury. Debt collection contractors under this Act shall receive a contingency fee as provided by the terms of their contracts with the Department of Revenue. Thereafter, 20% of all amounts collected by the Bureau, excluding amounts collected on behalf of the Departments of Public Aid and Revenue, shall be deposited into the Debt Collection Fund. All remaining amounts collected shall be deposited into the General Revenue Fund unless the funds are owed to any State fund or funds other than the General Revenue Fund. Moneys in the Debt Collection Fund shall be appropriated only for the administrative costs of the Bureau. On the last day of each fiscal year, unappropriated moneys and moneys otherwise deemed unneeded for the next fiscal year remaining in the Debt Collection Fund may be transferred into the General Revenue Fund at the Governor's reasonable discretion. The provisions of this subsection do not apply to debt that is exempt from subsection (a) pursuant to subsection (g-1) or child support debt referred to the Bureau by the Department of Public Aid pursuant to this amendatory Act of the 93rd General Assembly. Collections arising from referrals from the Department of Public Aid shall be deposited into such fund or funds as the Department of Public Aid shall direct, in accordance with the requirements of Title IV, Part D of the federal Social Security Act, applicable provisions of State law, and the rules of the Department of Public Aid. Collections arising from referrals from the Department of Employment Security shall be deposited into the fund or funds that the Department of Employment Security shall direct, in accordance with the requirements of Section 3304(a)(3) of the federal Unemployment Tax Act, Section 303(a)(4) of the federal Social Security Act, and the Unemployment Insurance Act.

(i) The Attorney General and the State Comptroller may assist in the debt collection efforts of the Bureau, as requested by the Department of Revenue.

(j) The Director of Revenue shall report annually to the General Assembly and State Comptroller upon the debt collection efforts of the Bureau. Each report shall include an analysis of the overdue debts owed to the State.

(k) The Department of Revenue shall adopt rules and procedures for the administration of this amendatory Act of the 93rd General Assembly. The rules shall be adopted under the Department of Revenue's emergency rulemaking authority within 90 days following the effective date of this amendatory Act of the 93rd General Assembly due to the budget crisis threatening the public interest.

(l) The Department of Revenue's Debt Collection Bureau's obligations under this Section 10 shall be subject to appropriation by the General Assembly.

(Source: P.A. 93-570, eff. 8-20-03.)

Section 99. Effective date. This Act takes effect upon becoming law.