KRS 131.570: Debtor to be notified that refund is subject to setoff -- Hearing -- Transfer

of refund -- Payment of excess to taxpayer.

(1) Upon determining that a pending individual income tax refund is subject to setoff as

authorized under this section, the deb tor shall be notified in writing by the

department of the claim made against such refund by the named claimant agency,

and of the department's intention to set off the refund against the debt to the

claimant agency. The notice shall provide that the debtor , within thirty (30) days

from the date of the notice, may request a hearing before the claimant agency as

provided by statute or local ordinance. No issues at such hearing may be considered

that have been litigated previously, and the debtor, after being given due notice of

rights of appeal, must exercise such rights in a timely manner. The decision of the

claimant agency shall be subject to appeal as all other decisions rendered by the

claimant agency. No funds shall be transferred to a claimant agency un til the

debtor's appeal rights have been exhausted.

(2) Any excess of the pending refund amount over the total claim filed against such

refund shall be promptly issued to the taxpayer by the department.

(3) In the event funds transmitted to a claimant agen cy are subsequently determined by

the claimant agency to be in excess of the liquidated debt, such claimant agency

shall promptly refund the excess to the taxpayer.

(4) In the event the department erroneously transfers funds to a claimant agency, the

claimant agency shall immediately upon notification thereof reimburse the

department for the amount erroneously transmitted to such agency. The department

shall promptly refund to the taxpayer the appropriate amount of such returned funds

with interest as provided in KRS 131.183(2).