Policy
FIACCT 05-04_00 Payments – Finder System – overview
Effective: July 1, 1994
Revised: January 1, 2015
Reviewed: January 1, 2015
Purpose
This policy provides the policies and procedures for the operation of the Finder System. Finder is a system that allows for the collection of debts owed to the State through administrative offsets.
Background
The Finder Program is a process through which state agencies, institutions, and courts submit outstanding debts to the Division of Finance. Those debts are matched against individual income tax refunds. When a match is made, an administrative offset may be taken against the refund and applied toward the satisfaction of the debt.
Utah Code Annotated (UCA) 59-10-529 authorizes the administrative offset of tax refunds against:
any income tax due,
any judgment obtained through due process of law by any entity, including state government,
any child support obligation which is delinquent as determined by the Office of Recovery Services, and
bail to ensure the appearance of the taxpayer before the appropriate authority to resolve an outstanding warrant against the taxpayer.
Utah Code Annotated 63A-3 establishes due process requirements for the State to obtain a lien against the debtor. Section 63A-3-307 (2) states that the lien created shall, for the purposes of Section 59-10-529 only, be considered a judgment.
Utah Code Annotated 63A-3-502 establishes the State Office of Debt Collection (OSDC). UCA 63A-3-504 gives OSDC rulemaking authority for collection techniques such as administrative offsets. State Administrative Rule 21 covers debt collection for state agencies. R21-3 covers debt collection through administrative offset. R21-3-5 delegates the functional collection of administrative offsets to the Division of Finance. The Division of Finance collects administrative offsets through the Finder Program.
Policy
Finder System Participation
The Division of Finance will determine the eligibility for an agency to participate in the Finder Program.
State agencies should submit debt information directly to OSDC. OSDC may then submit the debts to the
Finder System. OSDC may exempt agencies from OSDC’s collection process. Exempt agencies may submit debts directly to the Finder System.
Due Process
If a delinquent account receivable is eligible under Section 59-10-529, an agency should meet due process requirements in the code before submitting the debt to the Finder Program. If a delinquent account receivable is eligible under Section 63A-3-302, an agency should meet due process requirements in the code before submitting the debt to the Finder Program.
The receivable is owed to the agency and the agency maintains control of the account. Administrative offset augments rather than replaces existing collection procedures and is for use when effective procedures do not exist and the State could otherwise suffer loss.
Submitting Debts
Agencies, institutions, and courts may submit debts directly to the Finder System by secure FTP, or upload
them on the finder website. It is the responsibility of the agency to ensure the accuracy of all data submitted. Debts may be updated as often as daily. However, all debts are required to be updated at least
annually.
Claim Processing Hierarchy
Two or more agencies may submit a claim against the same state income tax refund. The claim processing hierarchy determines which agency will receive the refund or payment. The Division of Finance will establish the priority of claims submitted to the Finder System.
A. Any overpayment of state income tax is credited against any income tax due to the State Tax Commission prior to submission to the Finder System.
B. Claims filed by any agency of state government have priority over claims filed by the Internal
Revenue Service or an institution of higher learning.
C. Individual income tax refunds are credited as follows:
1. Judgments against the taxpayer obtained through due process of law by any entity of state
government.
a. State Employee bad debts
b. Office of Recovery Services
c. Office of Debt Collection
d. Other State Agencies
e. Higher Education and other Institutions
f. Utah Higher Education Assistance Authority
g. University of Utah Hospital
2. Outstanding warrant against the taxpayer for which bail is due.
3. Legal Judgments served against the State
a. Local Governments
b. Writs of Garnishment
c. Internal Revenue Service
d. U.S. Government
D. As one agency’s offset claim is fully paid, the next in order will receive payment until the offset claims are paid in full or the refund amount is exhausted.
Finder Program Fee
For rendering this service to state agencies, institutions and courts, the Division of Finance charges the cost of the service in accordance with State Administrative Rule R21-3-11. The Finder Program is financed through this administrative offset fee.
The Division of Finance is required to charge all participants an amount sufficient to reflect the ongoing
administrative cost of the program. Currently the fee is $15.00 per agency for each tax refund that is offset against their debt. This amount is deducted from the taxpayer’s refund, and the balance of the refund is then available to satisfy debts.
Once deducted from a tax refund, there are generally only two circumstances where this fee is refundable by the Division of Finance.
1. The court specifically requests a refund of the Finder fee.
2. The fee was taken related to an Internal Revenue Service (IRS) debt, which the IRS subsequently refunded to the taxpayer.
In these instances, the agency may request to have the $15.00 fee refunded to the taxpayer by the Division of Finance. In other cases after an offset has been made, such as a bankruptcy becomes known or when an agency has provided the Division of Finance with incorrect information, that agency will be responsible to pay for any refund of this fee to the taxpayer from whatever funds that agency has available.
Procedures
To Establish an Agency on the Finder System
Interested Agency
Contact the Division of Finance, Disbursement Section.
Division of Finance
Determine eligibility. Mail the new agency information packet to eligible agencies.
Eligible Agency
Return Request to Participate in Administrative Offset Program form to:
Finder Program
Division of Finance
1135 State Office Building
Salt Lake City, UT 84114
Division of Finance
Set up new agency in FINDER:
assign the agency a unique agency code
determine where the agency fits within the processing hierarchy
determine the type of debt the agency will be submitting
Due Process
Agency
Complete due process requirements and maintain the appropriate
documentation.
To Submit Debts
Agency
Submit debts to the Finder System in an approved format. Layouts for each type are included in the new agency information packet. Any questions about the layout should be directed to the Division of Finance, Disbursement Section.
Division of Finance
Load debts in the Finder System. Notify the agency of any data that cannot be loaded into the system.
Claim Property Hierarchy
Division of Finance
Offset each claim in the established priority order.