§ 421.17A — Administrative levy against accounts

Iowa § 421.17A

• Jurisdiction: Iowa
• Title X: FINANCIAL RESOURCES
• Ch. 421: DEPARTMENT OF REVENUE

Text

1. Definitions. As used in this section, unless the context otherwise requires:
a. “Account” means “account” as defined in section 524.103, or the savings or deposits of
a member received or being held by a credit union or a savings association, or certificates of
deposit. “Account” also includes deposits held by an agent, a broker-dealer, or an issuer as
defined in section 502.102. However, “account” does not include amounts held by a financial
institution as collateral for loans extended by the financial institution.
b. “Bank” means “bank”, “insured bank”, and “state bank” as these are defined in section
524.103.
c. “Credit union” means “credit union” as defined in section 533.102.
d. “Facility” means the centralized debt collection facility of the department of revenue
established pursuant to section 421.17, subsection 27.
e. “Financial institution” includes a bank, credit union, or savings association. “Financial
institution” also includes an institution which holds deposits for an agent, broker-dealer, or
an issuer as defined in section 502.102.
f. “Obligor” means a person who is indebted to the state or a state agency for any
delinquent accounts, charges, fees, loans, taxes, or other indebtedness due the state or
indebtedness being collected by the state.
g. “Working days” means Monday through Friday, excluding a holiday as defined in
section 421.9A.
2. Purpose and use.
a. Notwithstanding other statutory provisions which provide for execution, attachment,
garnishment, or levy against accounts, the facility may utilize the process established in this
section to collect delinquent accounts, charges, fees, loans, taxes, or other indebtedness
due the state or being collected by the state provided that any exemptions or exceptions
which specifically apply to enforcement of such obligations also apply to this section.
Administrative levy under this section is the equivalent of condemning funds under chapter
642. It is expressly provided that these remedies shall be cumulative and that no action
taken by the director or attorney general shall be construed to be an election on the part of
the state or any of its officers, employees, or representatives to pursue any other remedy
provided by law.
b. An obligor is subject to this section if the obligor’s debt is being collected by the facility.
c. Any amount forwarded by a financial institution under this section shall not exceed the
delinquent or accrued amount of the obligor’s debt being collected by the state.
3. Notice of intent to obligor. The facility may proceed under this section only if twenty
days’ notice has been provided by regular mail to the last known address of the obligor,
notifying the obligor that the obligor is subject to this section and of the facility’s intention
to use the levy process. The twenty days’ notice period shall not be required if the facility
determines that the collection of past due amounts would be jeopardized.
4. Verification of accounts and immunity from liability.
a. The facility may contact a financial institution to obtain verification of the account
number, the names and social security numbers listed for the account, and the account
balance of an account held by an obligor. Contact with a financial institution may be by
15 DEPARTMENT OF REVENUE, §421.17A
telephone or by written communication. The financial institution may require positive voice
recognition and may require the telephone number of the authorized person from the facility
before releasing an obligor’s account information by telephone.
b. The financial institution is immune from any civil or criminal liability which might
otherwise be incurred or imposed for information released by the financial institution to the
facility pursuant to this section.
c. The financial institution or the facility is not liable for the cost of any early withdrawal
penalty of an obligor’s certificate of deposit.
5. Administrative levy — notice to financial institution.
a. If an obligor is subject to this section, the facility may initiate an administrative action
to levy against an account of the obligor.
b. The facility shall send a notice to the financial institution with which the account is
placed, directing that the financial institution forward all or a portion of the moneys in the
obligor’s account to the facility.
c. The notice to the financial institution shall contain all of the following:
(1) The name and social security number of the obligor.
(2) A statement that the obligor is believed to have an account at the financial institution.
(3) A statement that pursuant to the provisions of this section, the obligor’s account is
subject to seizure and the financial institution is authorized and required to forward moneys
to the facility.
(4) The maximum amount that shall be forwarded by the financial institution, which shall
not exceed the delinquent or accrued amount of debt being collected by or owed to the state
by the obligor.
(5) Theprescribedtimeframewhichthefinancialinstitutionmustmeetinforwardingany
amounts.
(6) The address of the facility and the account number utilized by the facility for the
obligor.
(7) The telephone number of the agent for the facility initiating the action.
6. Administrative levy — notice of initiation of action to obligor and other account holders.
a. The facility may administratively initiate an action to seize one or more accounts of an
obligor who is subject to this section and section 421.17, subsection 27.
b. The facility shall notify an obligor subject to this section. The notice shall contain all
of the following:
(1) The name and social security number of the obligor.
(2) A statement that the obligor is believed to have an account at the financial institution.
(3) A statement that pursuant to the provisions of this section, the obligor’s account is
subject to seizure and the financial institution is authorized and required to forward moneys
to the facility.
(4) The maximum amount to be forwarded by the financial institution, which shall not
exceed the delinquent or accrued amount of debt being collected by or owed to the state by
the obligor.
(5) The prescribed time frames the financial institution must meet in forwarding any
amounts.
(6) A statement that any challenge to the action must be in writing and must be received
by the facility within ten days of the date of the notice to the obligor.
(7) The address of the facility and the account number utilized by the facility for the
obligor.
(8) The telephone number of the agent for the facility initiating the action.
c. The facility shall forward the notice of initiation of action to the obligor by regular
mail within two working days of sending the notice to the financial institution pursuant to
subsection 5, paragraph “b”.
d. The facility shall notify any other party known to have an interest in the account. The
notice shall contain all of the following:
(1) The name of the obligor.
(2) The name of the financial institution.
§421.17A, DEPARTMENT OF REVENUE 16
(3) A statement that the account in which the other party is known to have an interest is
subject to seizure.
(4) A statement that any challenge to the action must be in writing and must be received
by the facility within ten days of the date of the notice to the party known to have an interest.
(5) The address of the facility and the name of the obligor who also has an interest in the
account.
(6) The telephone number of the agent for the facility initiating the action.
e. The facility shall forward the notice to the other party known to have an interest
by regular mail within two working days of sending the notice to the financial institution
pursuant to subsection 5, paragraph “b”.
7. Responsibilities of financial institution. Upon receipt of a notice under subsection 5,
paragraph “b”, the financial institution shall do all of the following:
a. Immediately encumber funds in any account in which the obligor has an interest to the
extent of the debt indicated in the notice from the facility.
b. No sooner than fifteen days, and no later than twenty days from the date the financial
institution receives the notice under subsection 5, paragraph “b”, unless notified by the
facility of a challenge by the obligor or an account holder of interest, forward the moneys
encumbered to the facility with the obligor’s name and social security number, the facility’s
account number for the obligor, and any other information required in the notice.
c. The financial institution may assess a fee against the obligor, not to exceed twenty-five
dollars, for forwarding of moneys to the facility. This fee is in addition to the amount owed
to or being collected by the state by the obligor. If insufficient moneys are available in the
debtor’s account to cover the fee and the amount in the notice, the institution may deduct the
feeamountpriortoforwardingmoneystothefacilityandtheamountcreditedtotheobligor’s
account with the state shall be reduced by the fee amount.
8. Challenges to action.
a. Challenges under this section may be initiated only by an obligor or by an account
holder of interest. Reviews by the facility under this section are not subject to chapter 17A.
b. The person challenging the action shall submit a written challenge to the person
identified as the agent for the facility in the notice, within ten days of the date of the notice
of initiation of the levy.
c. The facility, upon receipt of a written challenge, shall review the facts of the
administrative levy with the challenging party within ten days of receipt of the challenge.
If the challenging party is not available for the review on the scheduled date, the review
shall take place without the challenging party being present. Information in favor of the
challenging party shall be considered by the facility in the review. The facility may utilize
additional information if such information is available. Only a mistake of fact, including, but
not limited to, a mistake in the identity of the obligor or a mistake in the amount owed to or
being collected by the state shall be considered as a reason to dismiss or modify the action.
d. If the facility determines that a mistake of fact has occurred, the facility shall proceed
as follows:
(1) If a mistake in identity has occurred or the obligor does not have a delinquent or
accrued amount being collected by or owed to the state, the facility shall notify the financial
institution that the administrative levy has been released. The facility shall provide a copy of
the notice to the obligor by regular mail.
(2) If the delinquent or accrued amount being collected by or owed to the state is less
than the amount indicated in the notice, the facility shall provide a notice to the financial
institution of the revised amount, with a copy of the original notice, and issue a notice to
the obligor by regular mail. Upon written receipt of the notice from the facility, the financial
institution shall release the funds in excess of the revised amount and forward the revised
amount to the facility pursuant to the administrative levy.
e. If the facility finds no mistake of fact, the facility shall provide a notice to that effect
to the challenging party by regular mail and notify the financial institution to forward the
moneys pursuant to the administrative levy.
f. The challenging party shall have the right to file an action for wrongful levy in district
court within thirty days of the date of the notice in paragraph “e”, either in the county where
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the obligor or the party known to have an interest in the account resides or in Polk county
where the facility is located. Actions under this section are in equity and not actions at law.
g. Recovery under this section is limited to restitution of the amount that has been
wrongfully encumbered or obtained by the department.
h. A challenge to an administrative action under this subsection cannot be used to extend
or reopen the statute of limitations to protest other departmental actions or to contest the
amount or validity of the tax. Only issues involving the levy can be raised in a challenge to
an administrative action under this subsection.