KRS 131.565: Definition of "state agency" -- Establishment of claim by state agency

pursuant to statutory provision, administrative regulation, or ordinance --

Requests to withhold individual income tax refund.

(1) For purposes of KRS 131.560 to 131.595, "state agency" or "state agencies" shall

include the Court of Justice and any local government, as those terms are defined in

KRS 45.241.

(2) No state agency shall request the withholding of any individual income tax refund

unless there is specific provision in statute, administrative regulation, or, in the case

of a local government, ordinance, for debtor appeal and hearing rights for that

particular debt.

(3) State agencies having the statutory, regulatory, or other legal provisions described in

subsection (2) o f this section shall establish claims against Kentucky individual

income tax refunds by notifying the commissioner of revenue in writing by a date

established by the department and, by dates agreed to by the department and each

state agency, shall furnish a list of all liquidated debts due the agency for which

withholding is required for individual income tax refunds due to be paid to the

debtor of the claimant agency. This list shall be submitted in such form and contain

such information as may be required by the commissioner of revenue to facilitate

identification of the refunds to be withheld. As used in this section the term

"liquidated debt" means a legal debt for a sum certain, which has been certified by

the claimant agency as final due and owing. The claimant agency must have made

reasonable efforts to collect such debt, and must have provided the debtor the

opportunity for appeal and formal hearing as provided by statute, administrative

regulation, or local ordinance. The claimant agency shall send t hirty (30) days' prior

written notification to the debtor of the intention to submit the claim to the

department for setoff as provided in KRS 131.570.

(4) The individual income tax refund withholding procedures provided in KRS 131.560

to 131.595 shall be in lieu of the procedures set forth in KRS 427.130 and 44.030

only with regard to sums due to a debtor from the department.

(5) No state agency shall request the withholding of any individual income tax refund

unless the debt for which withholding is requested is in a liquidated amount.

(6) Each state agency requesting the withholding of any individual income tax refund

shall indemnify the department against any and all damages, court costs, attorneys

fees, and any other expenses related to litigation which arises concerning the

administration of KRS 131.560 to 131.595 as it pertains to a refund withholding

action requested by such agency.

(7) Those state agencies requesting the withholding of individual income tax refunds

shall, on a per unit cost or other equitable basis determined by the department,

reimburse the department for all development, implementation, and administration

costs incurred but not otherwise funded under the provisions of KRS 131.560 to

131.595.

(8) The department may decline the withholding of individual income tax refunds from

agencies if the request would adversely impact the operation of the department.