HB46 Summary

• Amends Alabama Code Sections 40-18-100 and 40-18-103 to allow counties and municipalities to participate in the state income tax setoff program for debt collection.

• Counties and municipalities may submit debts of at least $25 owed to them for collection through the Department of Revenue, but only through approved third-party providers, the Association of County Commissions of Alabama, or the Alabama League of Municipalities.

• Third-party providers may assess a reasonable fee against the debtor, collected as the first amount set off against any tax refund, with liability limited to the amount of the assessed fee.

• Establishes notification requirements for taxpayers whose refunds are subject to setoff, including the right to contest the setoff in writing within 30 days and special protections for joint returns where only one spouse owes debt.

• Requires claimant agencies to hold transferred funds in an escrow account until final determination of the validity of the debt.