KRS 40.540: Setting off tax delinquency against bonus.

(1) If a claim is approved by the administrator or finally approved upon resort to the

board of review, the administrator shall promptly certify to the secretary of the

Finance and Administration Cabinet the names and addresses of persons found

entitled to be paid, as shown in the application, and the amount payable to each.

(a) A copy of each such certificate shall be sent to the commissioner of the

Department of Revenue, who shall promptly ascertain from the records of his

agency whether any person proposed t o be paid a bonus is delinquent in the

payment of any tax liability to the Commonwealth. No delinquency shall be

deemed to exist as to any asserted tax liability which is the subject of a bona

fide dispute. If any delinquency be found to exist, the commiss ioner of

revenue shall, within three (3) working days after this receipt of the certificate,

furnish the details thereof to the secretary of finance and administration; and if

no advice of tax delinquency is received by the secretary of finance and

administration before the end of the fourth working day after his receipt of

certification from the administrator, he shall, for the purposes of KRS 40.410

to 40.560, conclusively presume that no delinquency of tax liability to the

Commonwealth exists, but such p resumption shall apply only to the existence

or absence of a set -off by the Commonwealth against a certified claim for a

bonus, and shall not alter the facts as between the Commonwealth and any

taxpayer.

(b) If no advice of tax delinquency is received with in such allowed time, the

secretary of finance and administration may approve payment in accordance

with the certificate of the administrator, and may immediately draw a warrant

on the State Treasury for a check in payment, except that no warrant shall be

drawn by the secretary until sufficient funds have become available to pay the

bonus authorized by KRS 40.410 to 40.560.

(c) Upon receipt of such warrant the State Treasurer shall issue a check in

accordance therewith payable from funds made available for payment of the

bonus authorized by KRS 40.410 to 40.560, and the same shall promptly be

mailed to the payee thereof at the address shown in the certificate.

(2) If the secretary of finance and administration shall, within the allowed time, receive

advice from the commissioner of revenue of the existence of a delinquency on the

part of any person having an approved claim for a bonus, as to any tax liability to

the Commonwealth, the secretary of finance and administration shall note the same

on the certificate of the administrator, withhold payment, and forthwith send to the

claimant by registered mail a notice of the asserted delinquency, and the amount

thereof, and that it is proposed that the same be set off against the bonus payment.

(a) If the secretary o f finance and administration receives no protest in his office

within ten (10) working days after recording such notice, he shall conclusively

presume that the proposed set -off is just, shall apply the amount thereof in

reduction or extinguishment of the payment certified by the administrator, and

shall advise the commissioner of revenue of the amount set off against the

bonus, which advice shall be noted by the commissioner of revenue on the

records of his office as a credit upon the delinquent tax liability.

(b) If the tax set-off does not consume the entire amount of the bonus as certified

by the administrator, the secretary shall draw a warrant upon the State

Treasury for a check in the amount of the remainder, and upon receiving such

check from the Stat e Treasurer, shall send the same, together with advice of

the set-off, by mail, to the payee at the address shown in the certificate of the

director.

(3) If the secretary of finance and administration receives from the claimant a protest of

the asserted ta x delinquency, within the allowed time, the secretary shall withhold

approval for payment, and shall refer the protest to the commissioner of revenue for

disposition.

(4) If a tax set -off is made, and the claimant shall assert error with regard thereto, th e

exclusive remedy shall be by seeking refund from the commissioner of revenue.