{"data":{"id":"us-ky/krs-45.241","jurisdiction":"us-ky","citation":"KRS 45.241","heading":"Definitions for section and KRS 45.238 -- State agencies and Court of","body":"Justice to develop inventory of each debt -- Liquidated debts of agency, Court\nof Justice, or local government submitted to Department of Revenue --\nAccounting of uncollected de bt -- Treatment of collected debt -- Agreements\nwith public postsecondary education institutions -- Annual reports.\n(1) As used in this section and KRS 45.238:\n(a) \"Debt\" means:\n1. For agencies, a sum certain which has been certified by an agency as\ndue and owing; and\n2. For local governments, a sum certain which has been certified by a local\ngovernment as due and owing, including but not limited to any\ndelinquent taxes or fees other than delinquent real and personal property\ntaxes;\n(b) \"Liquidated debt\" means:\n1. For agencies, a legal debt for a sum certain which has been certified by\nan agency as final due and owing, all appeals and legal actions having\nbeen exhausted;\n2. For local governments, a legal debt for a sum certain which has been\ncertified by a local government as final due and owing, all appeals and\nlegal actions having been exhausted, including but not limited to any\ndelinquent taxes or fees other than delinquent real and personal property\ntaxes; and\n3. For the Court of Justice, a legal debt  including any fine, fee, court costs,\nor restitution due the Commonwealth, which have been imposed by a\nfinal sentence of a trial court of the Commonwealth and for which the\ntime permitted for payment pursuant to the provisions of KRS 534.020\nhas expired;\n(c) \"Agency\" means an organizational unit or administrative body in the\nexecutive branch of state government, as defined in KRS 12.010;\n(d) \"Department\" means the Department of Revenue;\n(e) \"Court of Justice\" means the Administrative Office of the Courts, all courts,\nand all clerks of the courts;\n(f) \"Forgivable loan agreement\" means a loan agreement entered into between an\nagency and a borrower that establishes specific conditions, which, if  satisfied\nby the borrower, allows the agency to forgive a portion or all of the loan;\n(g) \"Improper payment\" means a payment made to a vendor, provider, or\nrecipient due to error, fraud, or abuse;\n(h) \"Local government\" means any city, county, urban -county government,\nconsolidated local government, charter county, or unified local government of\nthe Commonwealth; and\n(i) \"Enrollment-related debt\" means a sum certain which has been certified by a\npublic postsecondary education institution as due and owing by  virtue of\nenrollment at the institution, including debt incurred for tuition, fees, student\nhousing, student dining, and other enrollment-related costs.\n(2) Each agency and the Court of Justice shall develop, maintain, and update in a\ntimely manner an ongoing inventory of each debt owed to it, including debts due to\nimproper payments, and shall make every reasonable effort to collect each debt.\nWithin sixty (60) days after the identification of a debt, each agency shall begin\nadministrative action to collect the debt.\n(3) The Auditor of Public Accounts shall review each agency's debt identification and\ncollection procedures as part of the annual audit of state agencies.\n(4) An agency shall not forgive any debt owed to it unless that agency has entered into\na forgivable loan agreement with a borrower, or unless otherwise provided by\nstatute.\n(5) For those agencies without statutory procedures for collecting debts, the\nDepartment of Revenue shall promulgate administrative regulations in accordance\nwith KRS Cha pter 13A to prescribe standards and procedures with which those\nagencies shall comply regarding collection of debts, notices to persons owing debt,\ninformation to be monitored concerning the debts, and an appeals process.\n(6) (a) Each agency and the Court of Justice shall identify all liquidated debts,\nincluding debts due to improper payments, and shall submit a list of those\nliquidated debts in the form and manner prescribed by the department to the\ndepartment for review. The department shall review the information submitted\nby the agencies and the Court of Justice and shall, within ninety (90) days of\nreceipt of the information, determine whether it would be cost -effective for\nthe department to further pursue collection of the liquidated debts.\n(b) A local government, after making reasonable efforts to collect its debts, may\nby ordinance, resolution, or otherwise pursuant to law, submit a list of its\nliquidated debts that have been due and owing for more than ninety (90) days\nto the department for review to  determine whether it would be cost -effective\nfor the department to pursue collection of the liquidated debts. The\ndepartment shall review the information submitted by a local government and\nshall, within ninety (90) days of receipt of the information, det ermine whether\nit would be cost -effective for the department to further pursue collection of\nthe liquidated debts.\n(c) The department may, after consultation with the agency, Court of Justice, or a\nlocal government, return the liquidated debt to the entity  submitting the\nliquidated debt if:\n1. The request for review contains insufficient information; or\n2. The debt is not feasible to collect.\nAny return of a liquidated debt shall be in writing, and shall state why the debt\nis being returned.\n(d) The depart ment shall identify in writing to the submitting agency, Court of\nJustice, or local government, the liquidated debts it has determined that it can\npursue in a cost -effective manner, and the agency, Court of Justice, or local\ngovernment shall officially ref er the identified liquidated debts to the\ndepartment for collection.\n(e) The agency, Court of Justice, and local government shall retain a complete\nrecord of all liquidated debts referred to the department for collection until the\ndebt is collected, forgiven, or returned as uncollectible.\n(f) Each agency, the Court of Justice, and local government shall make\nappropriate accounting of any uncollected debt as prescribed by law.\n(7) (a) If the agency recovers the debt funds prior to referral to the department,  the\nagency shall retain the collected funds in accordance with its statutory\nauthority.\n(b) 1. Upon referral of a liquidated debt or enrollment -related debt to the\ndepartment, the liquidated debt or enrollment -related debt shall accrue\nthe following amounts:\na. Interest on the total amount of the debt plus legal accruals at the\ntax interest rate provided in KRS 131.183, from the time of\nreferral until paid; and\nb. A one (1) time twenty -five percent (25%) collection fee on the\ntotal amount of the debt plus legal accruals, as of the time of\nreferral;\nunless the interest and collection fee are waived by the department.\n2. The interest and collection fee shall be in addition to any other costs\naccrued prior to the time of referral.\n3. The department may deduct and retain from the liquidated debt\nrecovered an amount equal to the lesser of the collection fee or the\nactual expenses incurred in the collection of the debt.\n4. In the case of agencies and the Court of Justice, any funds recovered by\nthe department after the deduction of the department's cost of collection\nexpenses may, at the discretion of the secretary of the Finan ce and\nAdministration Cabinet, be returned to the agency identifying the\nliquidated debt or to the Court of Justice for allocation as otherwise\nprovided by law. If the recovered funds and interest are not returned to\nthe agency or Court of Justice, the amo unts shall be deposited in the\ngeneral fund, except for Medicaid benefits funds and funds required by\nlaw to be remitted to a federal agency, which shall be remitted as\nrequired by law.\n5. In the case of local governments, any funds recovered by the department\nafter the deduction of the department's cost of collection expenses shall\nbe returned to the local government referring the liquidated debt, for\nallocation as provided by ordinance, resolution, or as otherwise provided\nby law.\n(c) Nothing in this sect ion shall prohibit the department from entering into a\nmemorandum of agreement with an agency pursuant to KRS 131.130(11), for\ncollection of debts prior to liquidation. If an agency enters into an agreement\nwith the department, the agency shall retain fund s collected according to the\nprovisions of the agreement.\n(d) This section shall not affect any agreement between the department and an\nagency entered into under KRS 131.130(11) that is in effect on July 13, 2004,\nthat provides for the collection of liquidated debts by the department on behalf\nof the agency.\n(e) This section shall not affect the collection of delinquent taxes by sheriffs or\ncounty attorneys under KRS 91A.070 or 134.504.\n(f) This section shall not affect the collection of performance or recl amation\nbonds.\n(g) 1. Notwithstanding any other provision of this section, each public\npostsecondary education institution and the department:\na. Shall enter into an annual memorandum of agreement pursuant to\nKRS 131.130 for collection of enrollment -related debts and\nliquidated debts referred by the institution; and\nb. May enter into a memorandum of agreement pursuant to KRS\n131.130 for collection of other debts prior to liquidation.\n2. The department is authorized to collect enrollment -related debts,\nliquidated debts, and other debts designated in a memorandum of\nagreement with a public postsecondary education institution on behalf of\na referring institution.\n3. The department shall not decline to collect a specific enrollment -related\ndebt or liquidated deb t that is referred to the department by a public\npostsecondary education institution unless the department:\na. Performs an individualized analysis of the debt;\nb. Determines that the debt is not:\ni. An enrollment-related debt;\nii. Liquidated debt; or\niii. Feasible to collect; and\nc. Provides a written statement to the referring institution that\nincludes an individualized analysis of the reason the specific debt\ncannot be collected by the department.\n(8) Upon receipt of a referred liquidated debt or enrollme nt-related debt and after its\ndetermination that the debt is feasible and cost -effective to collect, the department\nshall pursue collection of the referred debt in accordance with KRS 131.030.\n(9) By administrative regulation promulgated under KRS Chapter 13A, the department\nshall prescribe the electronic format and form of, and the information required in, a\nreferral.\n(10) (a) The department shall report annually by October 1 to the Interim Joint\nCommittee on Appropriations and Revenue on the collection of  debts,\nincluding debts due to improper payments, referred by agencies and the Court\nof Justice. The report shall include the total amount by agency and fund type\nof liquidated debt that has been referred to the department; the amount of each\nreferring agency's liquidated debt, by fund type, that has been collected by the\ndepartment; and the total amount of each referring agency's liquidated debt,\nby fund type, that the department determined to be cost -ineffective to collect,\nincluding the reasons for the determinations.\n(b) Each cabinet shall report annually by October 1 to the Interim Joint\nCommittee on Appropriations and Revenue on:\n1. The amount of previous fiscal year unliquidated debt by agency,\nincluding debts due to improper payments, fund type, category, and age,\nthe latter to be categorized as less than one (1) year, less than five (5)\nyears, less than ten (10) years, and over ten (10) years; and\n2. The amount, by agency, of liquidated debt, including debts due to\nimproper payments, not referred to the department; a summary, by\ncriteria listed in subsection (6)(a) of this section, of reasons the\ndepartment provided for not requesti ng referral of those liquidated\ndebts; and a summary of the actions each agency is taking to collect\nthose liquidated debts.\n(c) Beginning on October 1, 2005, the Court of Justice shall report annually by\nOctober 1 of each year to the Interim Joint Committ ee on Appropriations and\nRevenue the amount of previous fiscal year unliquidated debt by county and\nwhether in the Circuit Court or District Court; and fund type and age, the\nlatter categorized as less than one (1) year, less than five (5) years, less than\nten (10) years, and over ten (10) years. The first year for which the Court of\nJustice shall be required to report is the fiscal year beginning on July 1, 2004\nand ending on June 30, 2005. The Court of Justice shall not be required to\nreport unliquidated debts in existence prior to July 1, 2004.\n(d) The Finance and Administration Cabinet shall report annually by October 1 to\nthe Interim Joint Committee on Appropriations and Revenue on the amount of\nthe General Government Cabinet's unliquidated debt by agen cy, fund type,\nand age, the latter categorized as less than one (1) year, less than five (5)\nyears, less than ten (10) years, and over ten (10) years.\n(11) At the time of submission of a liquidated debt to the department for review, the\nreferring agency, the Court of Justice, or, where feasible, the local government shall\nprovide information about the debt to the State Treasurer for the Treasurer's action\nunder KRS 44.030(1).","path":["KRS Chapter 45"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58009","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:04Z","sha256":"afc38913300e00db466b23e4c65020439e9d8d78e98874c9742d298fefe9f90f","source_id":"us-ky","stale":false,"prev":"us-ky/krs-45.240","next":"us-ky/krs-45.242"},"notice":"GroundRules: Original legal text. Not legal advice."}