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| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1278 Introduced 2/17/2015, by Sen. Ira I. Silverstein SYNOPSIS AS INTRODUCED:
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| 35 ILCS 5/909.1 new | | 35 ILCS 5/911.3 | | 735 ILCS 5/12-703.5 new | |
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Amends the Illinois Income Tax Act. Provides that the Department of Revenue shall garnish a tax refund payable to a judgment debtor and instead remit the refund to the judgment creditor. Adds provisions governing the procedure for garnishment of tax refunds. Directs the Department to adopt rules to implement these provisions. Provides that specified refund withholding requests take priority over a garnishment order. Makes a corresponding change in the Code of Civil Procedure. Effective January 1, 2016.
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| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
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| 2 | | Be it enacted by the People of the State of Illinois,
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| 3 | | represented in the General Assembly:
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| 4 | | Section 5. The Illinois Income Tax Act is amended by |
| 5 | | changing Section 911.3 and by adding Section 909.1 as follows:
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| 6 | | (35 ILCS 5/909.1 new) |
| 7 | | Sec. 909.1. Garnishment of refunds. |
| 8 | | (a) As used in this Section: |
| 9 | | (1) "Debt" means any amount due and owing under a |
| 10 | | judgment. |
| 11 | | (2) "Debtor" means any person or legal entity who owes |
| 12 | | money to another, if: |
| 13 | | (A) the debt has been reduced to a judgment in this |
| 14 | | State; and |
| 15 | | (B) the judgment has not been: |
| 16 | | (i) satisfied by court order; |
| 17 | | (ii) set aside by court order; or |
| 18 | | (iii) discharged in bankruptcy. |
| 19 | | (3) "Refund" means a refund of overpaid income taxes |
| 20 | | imposed by the State of Illinois. |
| 21 | | (b) If a debtor owes a debt, the judgment creditor may, as |
| 22 | | provided in this Section: |
| 23 | | (1) have the Department garnish an unpaid refund |
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| 1 | | payable to the debtor; and |
| 2 | | (2) have the refund applied against the judgment debt. |
| 3 | | (c) To obtain a garnishment under this Section, a judgment |
| 4 | | creditor must obtain a garnishment order, under Part 7 of |
| 5 | | Article XII of the Code of Civil Procedure, naming the |
| 6 | | Department as garnishee. The judgment creditor shall provide |
| 7 | | the garnishment order to the Department. Upon receipt of the |
| 8 | | garnishment order, the Department shall do the following: |
| 9 | | (1) Calculate the total amount available to be refunded |
| 10 | | to the debtor for the tax year indicated in the order. |
| 11 | | (2) Prepare a verified disclosure that identifies the |
| 12 | | amount of the refund available after subtracting any |
| 13 | | setoff, counterclaim, or other demand of the State against |
| 14 | | the debtor. |
| 15 | | (3) Serve a copy of the verified disclosure described |
| 16 | | in item (2) of this subsection on: |
| 17 | | (A) the judgment creditor or the judgment |
| 18 | | creditor's representative; and |
| 19 | | (B) the debtor or the debtor's representative. |
| 20 | | (d) The Department shall deposit the amount available for |
| 21 | | garnishment under the terms of the order with the judgment |
| 22 | | attorney of record in the garnishment action, or, if the |
| 23 | | judgment creditor is not represented by an attorney, with the |
| 24 | | judgment creditor or the creditor's designee. |
| 25 | | (e) If 2 or more garnishment orders are received by the |
| 26 | | Department for the same debtor, the Department shall give |
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| 1 | | priority to the garnishment order that is received first by the |
| 2 | | Department. The Department shall process each garnishment in |
| 3 | | order of the date of receipt until the refund of the debtor has |
| 4 | | been applied in its entirety. After the debtor's refund has |
| 5 | | been applied in its entirety under a garnishment under this |
| 6 | | Section, the Department shall: |
| 7 | | (1) prepare a verified disclosure in the manner |
| 8 | | described in paragraph (2) of subsection (c) of this |
| 9 | | Section; and |
| 10 | | (2) serve a copy of a verified disclosure in the manner |
| 11 | | described in paragraph (3) of subsection (c) of this |
| 12 | | Section, stating that there is no remaining refund to |
| 13 | | garnish on any remaining garnishment orders not satisfied. |
| 14 | | (f) A judgment creditor must pay to the Department a |
| 15 | | processing fee of $5 that is chargeable to the debtor for each |
| 16 | | garnishment order under this Section provided to the |
| 17 | | Department. The judgment creditor must pay the fee at the time |
| 18 | | the garnishment order is provided to the Department. |
| 19 | | (g) The Department's liability to the plaintiff under a |
| 20 | | garnishment order under this Section is limited to the amount |
| 21 | | of the refund due to the debtor for the period the garnishment |
| 22 | | order is in effect, less any setoff, counterclaim, or other |
| 23 | | demand of the State against the debtor. After the Department |
| 24 | | has deposited the amount available under subsection (d) of this |
| 25 | | Section, the Department has no further liability in the matter |
| 26 | | unless: |
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| 1 | | (1) a garnishment order is received by the Department |
| 2 | | for a subsequent tax year; or |
| 3 | | (2) the amount deposited by the Department under |
| 4 | | subsection (d) of this Section is in question. |
| 5 | | (h) The Department shall adopt rules to implement this |
| 6 | | Section.
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| 7 | | (35 ILCS 5/911.3)
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| 8 | | Sec. 911.3. Refunds withheld; order of honoring requests. |
| 9 | | The Department shall honor refund withholding requests in the |
| 10 | | following order:
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| 11 | | (1) a refund withholding request to collect an unpaid |
| 12 | | State tax;
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| 13 | | (2) a refund withholding request to collect certified |
| 14 | | past due child
support amounts under Section 2505-650 of |
| 15 | | the Department of Revenue Law of the
Civil
Administrative |
| 16 | | Code of Illinois;
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| 17 | | (3) a refund withholding request to collect any debt |
| 18 | | owed to the State;
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| 19 | | (4) a refund withholding request made by the Secretary |
| 20 | | of the Treasury of
the United States, or his or her |
| 21 | | delegate, to collect any tax liability arising
from Title |
| 22 | | 26 of the United States Code; |
| 23 | | (4.5) a refund withholding request made by the |
| 24 | | Secretary of the Treasury of the United States, or his or |
| 25 | | her delegate, to collect any nontax debt owed to the United |
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| 1 | | States as authorized under subsection (i-1) of Section 10 |
| 2 | | of the Illinois State Collection Act of 1986; |
| 3 | | (4.6) a refund withholding request to collect any debt |
| 4 | | owed to a unit of local government, school district, or |
| 5 | | public institution of higher education collected under an |
| 6 | | intergovernmental agreement entered into under Sections |
| 7 | | 10.05 and 10.05d of the State Comptroller Act;
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| 8 | | (5) a refund withholding request pursuant to Section |
| 9 | | 911.2 of this Act; and
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| 10 | | (6) a refund withholding request to collect certified |
| 11 | | past due fees owed to the Clerk of the Circuit Court as |
| 12 | | authorized under Section 2505-655 of the Department of |
| 13 | | Revenue Law of the Civil Administrative Code of Illinois; |
| 14 | | and .
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| 15 | | (7) a garnishment order under Section 909.1 of this |
| 16 | | Act. |
| 17 | | (Source: P.A. 97-269, eff. 12-16-11 (see Section 15 of P.A. |
| 18 | | 97-632 for the effective date of changes made by P.A. 97-269); |
| 19 | | 97-632, eff. 12-16-11.)
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| 20 | | Section 10. The Code of Civil Procedure is amended by |
| 21 | | adding Section 12-703.5 as follows:
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| 22 | | (735 ILCS 5/12-703.5 new) |
| 23 | | Sec. 12-703.5. Garnishment of tax refunds. Notwithstanding |
| 24 | | any other provision of this Part, if the garnishee is the |