1. Definitions. As used in this section, unless the context otherwise requires:
a. “Obligor” means a person, not including a public agency, who has been determined to
owe a qualifying debt.
b. “Public agency” means a board, commission, department, including the department of
revenue, or other administrative office or unit of the state of Iowa or any other state entity
reported in the Iowa annual comprehensive financial report, or a political subdivision of the
state, or an office or unit of a political subdivision. “Public agency” does include the clerk of
the district court as it relates to the collection of a qualifying debt. “Public agency” does not
include the general assembly or office of the governor.
c. “Public payment” means any claim a public agency owes to an obligor.
d. “Qualifying debt” means any of the following:
(1) Any debt, which is assigned to the department of health and human services, or which
is owed to the department of health and human services for unpaid premiums under section
249A.3, subsection 2, paragraph “a”, subparagraph (1), or which child support services is
otherwise attempting to collect, or which foster care services of the department of health and
human services is attempting to collect on behalf of a child receiving foster care provided by
the department of health and human services.
(2) Any debt which is in the form of a liquidated sum due, owing, and payable to the clerk
of the district court.
(3) Any liquidated sum certain, owing, and payable to a public agency, with respect to
which the public agency has provided the obligor an opportunity to protest or challenge the
sum in a manner in compliance with applicable law and due process, and which has been
determined as owing through the challenge or protest, or for which the time period provided
by the public agency to challenge or protest has expired.
2. Setoff procedure. The department shall establish and maintain a procedure to set off
against each public payment any qualifying debt the obligor owes to a public agency. The
procedure shall only apply when the department determines, in its discretion, it is feasible
and complies with applicable law. The procedure shall meet the following conditions:
a. Each participating public agency shall obtain and forward to the department the full
name and social security number of each obligor, or similar identifying information for
an obligor who is not a natural person, and any other information concerning the person
the department shall require. The department shall cooperate with public agencies in the
exchange of information relevant to identifying public payments and qualifying debt that
may be subject to setoff. However, the department shall provide only relevant information
required by a public agency. The information shall be held in confidence and used for the
purpose of setoff only. Section 422.72, subsection 1, does not apply to this paragraph.
b. Each participating public agency shall, at least annually, certify to the department
the information required by paragraph “a”, the amount of each obligor’s liability to and
the amount of each claim on the public agency, and that all liabilities submitted constitute
qualifying debt. The department may, by rule, require more frequent certifications or
certifications of additional information about the qualifying debt or the obligor. The
department may, in its discretion, review the accuracy of any certification made pursuant to
this paragraph.
c. The department may, by rule, establish a minimum amount of liabilities and claims that
may be setoff.
d. Upon submission of an allegation of liability by a public agency, the department shall
notifythepublicagencywhethertheobligorisentitledtoapublicpayment, and, ifsoentitled,
shall notify the public agency of the amount of the obligor’s entitlement and last address
known to the department. Section 422.72, subsection 1, does not apply to this paragraph.
e. Upon notice of entitlement to a public payment, the department shall send written
notification to the obligor and any known co-payee of the public payment. The notification
shall contain the public agency’s assertion of its rights to all or a portion of the payment and
of the public agency’s entitlement to recover the liability through the setoff procedure, the
basis of the assertion, the opportunity to request that a jointly or commonly owned right to
payment be divided among owners, and the obligor’s opportunity to give written notice of
intent to contest the setoff procedure or that the debt is a qualifying debt.
f. Upon the request of an obligor or a co-payee of the public payment received by the
department within the time period provided in the written notification, and upon receipt of
the full name and social security number of the co-payee, or similar identifying information
of a co-payee who is not a natural person, the department shall notify the public agency that
the public agency shall divide a jointly or commonly owned right to payment in the manner
determinedbythedepartment. Anyjointlyorcommonlyownedrighttopaymentisrebuttably
presumed to be owned in equal portions by its joint or common owners.
g. The department shall, after the department has sent the notice to the obligor provided
in paragraph “e”, set off the amount last certified by the public agency as owed to the agency
against the public payment. The department shall refund any balance of the payment to the
obligor. The department shall periodically transfer amounts set off to the public agencies
entitled to them, reduced by any fees charged for setoff. If an obligor gives written notice of
intent to contest a setoff, the public agency shall hold a refund or rebate until final disposition
of the challenge. Upon completion of the setoff, the department shall provide written notice
of the completed setoff to the obligor and any co-payees of the payment subject to setoff.
h. Thedepartment’sexistingrighttocreditagainsttaxdueortobecomedueundersection
422.73 is not to be impaired by a right granted to or a duty imposed upon the department
by this section. This section is not intended to impose upon the department any additional
requirement of notice, hearing, or appeal concerning the right to credit against tax due under
section 422.73.
i. If the alleged liability is owing and payable to the clerk of the district court and setoff
as provided in this section is sought, all of the following shall apply:
(1) The judicial branch shall prescribe procedures to permit an obligor to contest the
amount of the obligor’s liability to the clerk of the district court.
(2) The department shall, except for the procedures described in subparagraph (1),
provide for any other applicable procedures concerning setoff as provided in this subsection.
(3) Upon completion of the setoff, the department shall file, at least monthly, with the
clerk of the district court a notice of satisfaction of each obligation to the full extent of all
moneys collected in satisfaction of the obligation. The clerk shall record the notice and enter
a satisfaction for the amounts collected. A separate written notice is not required.
3. Challenges to a setoff.
a. Challenges under this section may be initiated only by an obligor. The department’s
review of a challenge to a setoff is not subject to chapter 17A.
b. The obligor challenging the setoff shall submit a written challenge in the manner
provided in the notice described in subsection 2, paragraph “e”, within fifteen days of the
date of the notice.
c. The department, upon receipt of a written challenge, shall provide written notice of the
challenge to the public agency. The department shall review the information submitted by
the public agency prior to the setoff and shall obtain additional information from the public
agency if necessary to establish that the liability is a qualified debt, or to verify the identity
of the obligor or the amount owed. The department shall set a time to occur within ten days
of receipt of the challenge to review the relevant facts of the challenge with the obligor. An
alternative time may be set at the request of the obligor. If the obligor does not participate in
the review at the scheduled time and an alternative time is not requested and approved, the
review shall take place without the obligor being present. Information in favor of the obligor
and the public agency shall be considered in the review. Only a determination that the debt is
not a qualified debt or a mistake of fact, including a mistake in the identity of the obligor, or
a mistake in the amount owed, shall be considered as a reason to deny or modify the setoff.
d. If the department determines that a mistake of fact has occurred or that the liability
submitted does not constitute a qualified debt, the public agency shall promptly return the
setoff funds to the original payee or payees unless there is another qualifying debt available
for setoff.
e. If the department finds no mistake of fact and that the liability is a qualified debt, the
department shall provide a notice of that effect to the obligor and the public agency, and the
public agency shall retain the funds subject to setoff.
f. The obligor shall have the right to file an action for wrongful setoff in district court
within thirty days of the date of the notice to the obligor provided in paragraph “e”, either
in the county where the obligor is located or the county where the main office of the public
agency is located. The defendant in such action shall be the public agency, with an additional
copy of such petition to be served upon the office of the attorney general. Actions under this
sectionareinequityandnotactionsatlawandareanobligor’sexclusiveremedytochallenge
any action arising from or related to this section.
g. Recovery under this subsection is limited to restitution from the public agency of the
amount that has been wrongfully setoff or obtained by the public agency.
h. A challenge under this subsection shall not be used to extend, toll, or reopen the statute
of limitations to challenge or contest a qualified debt. Only mistakes of fact, failure of the
public agency to comply with the provisions of this section, or a liability that is not a qualified
debt, shall constitute grounds for challenge under this subsection.
4. Priority. In the case of multiple claims to payments filed under this section, priority
shall be given to claims filed by child support services or foster care services, next priority
shall be given to claims filed by the clerk of the district court, next priority shall be given to
claimsfiledbythedepartmentofinspections, appeals, andlicensingrelatingtoinvestigations
by the department, next priority shall be given to claims that will be deposited into the state
general fund, and last priority shall be given to claims filed by other public agencies. In the
case of multiple claims in which the priority is not otherwise provided by this subsection,
priority shall be determined in accordance with rules to be established by the department.
5. Reciprocal agreements. The director shall have the authority to enter into reciprocal
agreements with departments or agencies of other states that have established a setoff
procedure.
6. Fees. The department may establish fees for use of the setoff system to be paid by
participating public agencies to the department.
2020Acts, ch1064, §16, 28; 2020Acts, ch1118, §73, 74; 2022Acts, ch1045, §7, 8; 2023Acts,
ch 19, §1353, 1358, 1359, 2042, 2044; 2023 Acts, ch 64, §104, 111; 2023 Acts, ch 115, §43, 44