State of South Dakota
|
NINETIETH SESSION LEGISLATIVE ASSEMBLY, 2015 |
400W0368 | SENATE BILL NO. 59 |
Introduced by: The Committee on State Affairs at the request of the Department of Revenue
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. There is hereby created the state debt collection office. The state debt collection office is attached to the Department of Revenue for budgeting and reporting purposes.
Section 2. Terms used in this Act mean:
constitutional office;
Section 3. The office shall work to collect each debt referred to the office. The character of the debt in the hands of the referring entity does not change by the referral of the debt to the office for collection.
Section 4. Among others granted by this Act, the office may:
Section 5. Notwithstanding any other provision of law to the contrary, the office may use the collection remedies provided in this Act, or any other collection remedy provided by state law, to facilitate the collection of debt referred to the office by a referring entity. Except for the
debt collection powers vested in the Unified Judicial System, the office may also use the
referring entity's statutory collection authority to collect the debt owed to the referring entity.
The office may determine which method or combination is most suitable to collect the debt.
Section 6. For any debt referred to the office for collection after July 1, 2015, the office shall
collect a cost recovery fee in addition to the debt referred to the office for collection. The cost
recovery fee is calculated by multiplying the principal amount of the debt referred to the office
by twenty percent.
Section 7. The office shall retain the cost recovery fee and transfer any other moneys collected from a debtor to the referring entity within thirty days after the end of the month in which the moneys were collected. If the amount collected is less than the principal amount of the debt referred to the office and the cost recovery fee imposed by this Act, the amount collected shall be prorated between the principal amount of the debt referred and the cost recovery fee.
Section 8. The cost recovery fee shall be deposited into the office special fund to be used to fund the operations of the office.
Section 9. Any executive branch agency may use the office to collect debt owed to an executive branch agency.
Section 10. The Unified Judicial System may use the office to collect any costs, fines, fees, or restitution ordered in any adult criminal proceeding.
Section 11. The South Dakota Board of Regents may use the office to collect any debt owed within the South Dakota Board of Regents' system.
Section 12. Any constitutional office may use the office to collect debt owed to the
constitutional office.
Section 13. Prior to transferring any debt to the office for collection, the referring entity shall
provide a final notification to the debtor that the debt will be referred to the office for collection.
Section 14. The office shall keep any information regarding any debt referred to the office confidential. All data, records, and files utilized for debt collection as provided for in this Act shall be confidential and privileged, and no person may divulge or disclose any information obtained from such records and files except in the administration and enforcement of this Act.
Section 15. The office may collect data for purposes of collecting any debt referred to the office. Notwithstanding any law to the contrary, referring entities are authorized to transmit data to the office deemed necessary by the office to aid in the collection of the referred debt.
Notwithstanding any law to the contrary, the office may request from any state agency any data
necessary to collect any debt referred to the office, and the data shall be provided by the state
agency to the office. Any information provided by a referring entity or a state agency may only
be used for the purpose of collecting the debts referred to the office.
Section 16. The office shall establish and maintain a centralized electronic debt management
system to compile the information provided by referring entities, to track the collection efforts
for all debt referred to the office, to cross-reference and identify debtors for collection purposes,
and to maintain all information provided or collected from all sources concerning addresses,
financial records, and any other information useful to the office.
Section 17. Notwithstanding other statutory provisions which provide for execution, attachment, garnishment, or levy against accounts, the office may use the administrative wage assignment process established in sections 17 to 35, inclusive, of this Act, to collect debt referred to the office. It is expressly provided that these remedies shall be cumulative and that no action taken by the office shall be construed to be an election on the part of the office to pursue or not pursue any other remedy provided by law.
Section 18. A debtor is subject to administrative wage assignment if the debtor's debt is being collected by the office. Any amount forwarded to the office by an employer under an administrative wage assignment may not exceed the amount of the debtor's debt plus the cost recovery fee being collected by the office regarding the debtor.
Section 19. The office may proceed with an administrative wage assignment if notice has
been sent by regular mail, by electronic means, or by delivery by an employee of the office, to
the debtor notifying the debtor that the debtor is subject to administrative wage assignment and
of the office's intention to use the administrative wage assignment process.
Section 20. If the debtor has more than one employer, the office may receive administrative
wage assignments from one or more of the employers until the debt is satisfied. The office shall
give notice to all employers from whom an administrative wage assignment is sought.
Section 21. The administrative wage assignment notice from the office to the debtor shall
contain the following information:
Section 22. The office may contact an employer to obtain verification of employment, and any specific information from the employer that the office needs to initiate, effectuate, or maintain collection of the debt. Contact with an employer may be by oral, written, or electronic communication. The employer may require an appropriate verification process for the communication between the employer and the office.
Section 23. An employer is immune from any civil or criminal liability for information released by the employer to the office pursuant to this Act.
Section 24. The office is not liable for any costs incurred or imposed by any employer or debtor for initiating, effectuating, or maintaining an administrative wage assignment pursuant to this Act.
Section 25. The office may send a notice of administrative wage assignment to the employer any time after sending notice of the administrative wage assignment to the debtor pursuant to section 21 of this Act. The notice shall inform the employer of the amount to be assigned to the office. Upon receipt of such notice of administrative wage assignment, the employer shall withhold from compensation due, or to become due to the employee, the total amount shown by the notice. The office may direct the employer to withhold part of the amount due the employee each pay period, until the total amount as shown by the notice has been withheld. The employer may not withhold more than twenty-five percent of the compensation due to any employee for any one pay period, except if the employee leaves the employ of the employer or gives notice of his or her intention to do so, or is discharged for any reason. The employer shall withhold the entire amount otherwise payable to such employee or so much thereof as may be necessary to equal the unwithheld balance of the amount shown in the notice. The compensation due to any employee for purposes of determining the twenty-five percent maximum withholding for any one pay period shall include all wages, salaries, and fees constituting income, including compensation paid for future services, when paid to an employee, less any amount payable pursuant to any garnishment action served prior to the notice of administrative wage assignment and any amount covered by any irrevocable and previously effective assignment of wages. The amount and the facts relating to the assignment the employer shall be disclosed to the office within ten days after service of the notice of administrative wage assignment.
Section 26. The notice of administrative wage assignment to the employer shall contain the following information:
Section 27. Upon receipt of the notice of administrative wage assignment from the office, the employer shall do all of the following:
Section 28. The employer may assess a one-time fee against the debtor, not to exceed twenty-five dollars, for forwarding of moneys to the office, for each notice received by the employer pursuant to section 26 of this Act. This fee is in addition to the amount owed to or being collected by the office from the debtor. If insufficient funds are available from the debtor's compensation to cover the fee and the amount in the notice of administrative wage assignment, the employer may deduct the fee amount prior to forwarding moneys to the office.
Section 29. Challenges to an administrative wage assignment may be initiated only by a debtor. Any review by the office of a challenge to an administrative wage assignment is not subject to chapter 1-26.
Section 30. The debtor challenging an administrative wage assignment shall submit a written challenge to the office within ten days of the date of the notice sent pursuant to section 21 of this Act.
Section 31. The office, upon receipt of a written challenge, shall review the facts of the
administrative wage assignment with the debtor within ten days of receipt of the challenge. If
the debtor is not available for the review on the scheduled date, the review may take place
without the debtor present. Information in favor of the debtor shall be considered by the office
in the review. The office may utilize additional information if the information is available. Only
a mistake of fact, including a mistake in the identity of the debtor or a mistake in the amount
owed to or being collected by the office, shall be considered as a reason to dismiss or modify
the administrative wage assignment.
Section 32. If the office determines that a mistake of fact has occurred, the office shall
proceed as follows:
Section 33. If the office finds no mistake of fact, the office shall send a notice to that effect
to the debtor by regular mail, by electronic means, or by delivery by an employee of the office,
and notify the employer to forward the moneys pursuant to the administrative wage assignment.
Section 34. The debtor may file an action for wrongful assignment in circuit court within
thirty days of the date of the notice sent to a debtor pursuant to subdivision (2) of section 32 of
this Act or section 33 of this Act, either in the county where the debtor is located or in Hughes
County where the office is located. Actions under this section are in equity and not actions at
law. Recovery under this section is limited to restitution of the amount that has been wrongfully
encumbered or obtained by the office. A challenge to an administrative wage assignment under
this section may not be used to extend or reopen the statute of limitations to protest other actions
or to contest the amount or validity of the debt. Only issues involving the assignment may be
raised in a challenge to an action under this section.
Section 35. A notice of administrative wage assignment given to the debtor is effective
without the service of another notice until the debt, plus the cost recovery fee being collected
by the office is paid in full or the debtor receives notice from the office that the administrative
wage assignment shall cease. Cessation of the administrative wage assignment does not affect
the debtor's duties and liabilities respecting the wages, income or compensation already withheld
pursuant to the administrative wage assignment.
Section 36. The office may establish and maintain a financial institution data match system
for the purpose of identifying and seizing the non-exempt assets of debtors as identified by the
office. The office may designate a third party to establish and maintain this system. Any third
party so designated shall keep all information it obtains from both the office and the financial
institution confidential. Any employee, agent, or representative of that third party is prohibited
from disclosing that information to anyone other than the office or the financial institution.
Section 37. Each financial institution doing business in the state shall, in conjunction with
the office, establish and maintain a data match system to facilitate the identification and seizure
of nonexempt financial assets of debtors identified by the office. If a financial institution has a
data match system developed or used to administer the child support enforcement programs of
this state, and if that system is approved by the office, the financial institution may use that
system to comply with the provisions of this Act.
Section 38. Each financial institution shall provide identifying information each calendar
quarter to the office for each debtor identified by the office who maintains an account at the
institution. The identifying information shall include the debtor's name, address, and social
security number or other taxpayer identification number, and all account numbers and balances
in each account.
Section 39. A financial institution that complies with this Act is not liable under state law
to any person for the disclosure of information to the office, or any other action taken in good
faith to comply with this Act.
Section 40. Any financial institution furnishing a report to the office is prohibited from
disclosing to any debtor that the name of the debtor has been received from or furnished to the
office, unless authorized in writing by the office to do so. A violation of this section shall result
in the imposition of a civil penalty equal to the greater of one thousand dollars or the amount
in the account of the person to whom the disclosure was made for each instance of unauthorized
disclosure by the financial institution. The civil penalty may be assessed and collected under the
provisions of this Act.
Section 41. A financial institution may disclose to its depositors or account holders that the
office has the authority to request certain identifying information on certain depositors or
account holders under the financial institution data match system for debt collection purposes.
Section 42. Notwithstanding other statutory provisions which provide for execution,
attachment, garnishment, or levy against accounts, the office may utilize the administrative bank
levy process established in sections 42 to 58, inclusive, of this Act to collect debt referred to the
office. It is expressly provided that these remedies shall be cumulative and that no action taken
by the office shall be construed to be an election on the part of the office to pursue or not pursue
any other remedy provided by law.
Section 43. The office may initiate an administrative bank levy to seize one or more
accounts of a debtor who is subject to this Act.
Section 44. No amount forwarded by a financial institution pursuant to an administrative
bank levy may exceed the amount of debt due on that date plus the cost recovery fee being
collected by the office.
Section 45. The office may proceed with an administrative bank levy if notice has been sent
by regular mail, by electronic means, or by delivery by an employee of the office, to the debtor
notifying the debtor that the debtor's account is subject to administrative bank levy and of the
office's intention to use the administrative bank levy process.
Section 46. The office may contact a financial institution to obtain verification of the
account number, the names and social security numbers listed for the account, and the account
balance of an account held by a debtor. Contact with a financial institution may be by oral,
written, or electronic communication. The financial institution may require an appropriate
verification process for the communication between the financial institution and the office.
Section 47. The financial institution is immune from any civil or criminal liability for
providing information to the office pursuant to this Act.
Section 48. The office is not liable for any costs incurred or imposed by any financial
institution or debtor for initiating, effectuating, or maintaining an administrative bank levy
pursuant to this Act.
Section 49. To initiate an administrative bank levy against an account of a debtor, the office shall send by regular mail, by electronic means, or by delivery by an employee of the office, a notice to the financial institution with which the account is placed, directing the financial institution to forward all or a portion of the moneys in the debtor's account to the office. The notice to the financial institution shall contain the following information:
Section 50. The office shall notify a debtor subject to an administrative bank levy pursuant to this Act. The notice shall contain the following information:
Section 51. The office shall notify any other party known to have an interest in an account subject to an administrative bank levy. The notice shall contain all of the following:
subject to seizure;
Section 52. Upon receipt of a notice made pursuant to section 49 of this Act, the financial institution shall do all of the following:
Section 53. The financial institution may assess a fee against the debtor, not to exceed twenty-five dollars, for forwarding of moneys to the office pursuant to section 52 of this Act. This fee is in addition to the amount being collected by the office from the debtor. If insufficient
moneys are available in the debtor's account to cover the fee and the amount in the notice, the
institution may deduct the fee amount prior to forwarding moneys to the office.
Section 54. Any challenge to an administrative bank levy may be initiated only by a debtor
or by an account holder of interest.
Section 55. A debtor or an account holder of interest challenging an administrative bank levy
shall submit a written challenge to the office within ten days of the date of the notice sent
pursuant to sections 50 or 51 of this Act, respectively.
Section 56. The office, upon receipt of a written challenge, shall review the facts of the
administrative bank levy with the challenging party within ten days of receipt of the challenge.
If the challenging party is not available for the review on the scheduled date, the review may
take place without the challenging party being present. Information in favor of the challenging
party shall be considered by the office in the review. The office may utilize additional
information if such information is available. Only a mistake of fact, including a mistake in the
identity of the debtor or a mistake in the amount owed to or being collected by the office, shall
be considered as a reason to dismiss or modify the levy. Reviews by the office under this section
are not subject to chapter 1-26.
Section 57. If the office determines that a mistake of fact has occurred, the office shall
proceed as follows:
amount, with a copy of the original notice, and send a notice to the debtor by regular
mail, by electronic means, or by delivery by an employee of the office. Upon receipt
of the notice from the office, the financial institution shall release the funds in excess
of the revised amount and forward the revised amount to the office pursuant to the
administrative bank levy.
Section 58. If the office finds no mistake of fact, the office shall send a notice to that effect
to the challenging party by regular mail, by electronic means, or by delivery by an employee of
the office, and notify the financial institution to forward the moneys pursuant to the
administrative bank levy.
Section 59. The challenging party may file an action for wrongful levy in circuit court within
thirty days of the date of the notice sent pursuant to subdivision (2) of section 57 of this Act or
section 58 of this Act, either in the county where the debtor or the party known to have an
interest in the account resides or in Hughes County where the office is located. Actions under
this section are in equity and not actions at law. Recovery under this section is limited to
restitution of the amount that has been wrongfully encumbered or obtained by the office. A
challenge to an administrative bank levy under this section may not be used to extend or reopen
the statute of limitations, to protest other actions of the referring entity, or to contest the amount
or validity of the debt. Only issues involving the levy can be raised in a challenge under this
section.
Section 60. The notices provided for by sections 21, 26, 49, and 50 of this Act, in addition
to the requirements of each section, shall include the following:
amount of the debt plus the cost recovery fee being collected by the office regarding
the debtor;
Section 61. The office shall have that settlement authority granted to it by the referring entity. The office and the referring entity may enter into an agreement regarding settlement authority.
Section 62. No person that owes a debt that is referred to the office may renew or obtain:
unless the debt and cost recovery fee is either paid in full or the debtor has entered into a payment plan with the office and payment pursuant to the plan is current.
Section 63. No agency, board or entity of the state of South Dakota may issue or renew any motor vehicle, motorcycle or boat registration, or any professional license, registration, certification, or permit, or any hunting license or any fishing license, of any applicant after receiving notice from the office that the applicant has a debt that is being collected by the office, unless the applicant first makes satisfactory arrangements with the office for payment of the debt and cost recovery fee. An applicant who disputes a determination by the office that the applicant has a debt that has been referred to the office for collection shall, upon request, be given a due
process hearing by the office. Upon recommendation by the office, the licensing agency or board
or entity may issue a temporary license, registration, certification, or permit to the applicant
pending final resolution of the due process hearing.
Section 64. Any payment of any kind to be made to a debtor by the state of South Dakota, when the debtor has a debt that is referred to the office, is subject to offset by the office unless the debt and cost recovery fee is either paid in full or the debtor has entered into a payment plan with the office and payment pursuant to the plan is current.
Section 65. If the office is unable to collect the debt referred to it, the office, with the approval of the referring entity, may forward the debt to a collection agency or agencies for collection. The debt collection agency shall be permitted to add a collection charge to the debt forwarded to the collection agency as payment for its collection services.
Section 66. If more than one referring entity has referred a debt to the office regarding the same debtor, or if the same referring entity has referred multiple debts to the office regarding the same debtor, the office shall collect the first referred debt before proceeding to the collection of the second or subsequent referred debt.
Section 67. The office may promulgate rules, pursuant to chapter 1-26, in the following areas:
Section 68. The office shall maintain the necessary data to provide statistical measurements of the operation of the office as provided in this Act.