# COMAR Title 17 — Department of Budget and Management

## Subtitle 01 — Central Collection Unit

### Chapter 02 — Tax Refund Intercept Program—Delinquent Debts

**Authority:** State Finance and Procurement Article, §3-303; State  Government Article, §10-613; Article 19, §44; Annotated Code of Maryland

**Administrative History:** Effective date:

**Administrative History:** Regulations .01—.05 adopted as an emergency provision effective September 15, 1982 (9:20 Md. R. 1979); adopted permanently effective November 8, 1982 (9:22 Md. R. 2198)

**Administrative History:** Regulations .01 amended, .02 and .05 repealed, and new Regulations .02 and .05 adopted as an emergency provision effective November 14, 1990 (17:24 Md. R. 2835); adopted permanently effective February 18, 1991 (18:3 Md. R. 308)

**Administrative History:** Regulation .02A, C, and D amended effective December 28, 1987 (14:26 Md. R. 2748)

**Administrative History:** Regulation .03D and E amended effective December 28, 1987 (14:26 Md. R. 2748)

**Administrative History:** Regulation .04A amended effective December 28, 1987 (14:26 Md. R. 2748)

**Administrative History:** Regulation .05A and E amended effective December 28, 1987 (14:26 Md. R. 2748)

#### Regulation .01 Definitions.

*COMAR 17.01.02.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Administrative law judge” means a judge within the Office of Administrative Hearings, appointed by the Chief Administrative Law Judge to preside over administrative hearings.

  (2) “Central Collection Unit (Unit)” means the Central Collection Unit of the Department of Budget and Management.

  (3) “Certify” means to furnish to the Comptroller the names, with other identification including address, Social Security or federal tax identification number, and amount of debt of debtors owing money to the State.

  (4) “Comptroller” means the Comptroller of the Treasury.

  (5) “Debt” means any liquidated sum due and owing any State agency which has accrued through contract, subrogation, tort, operation of law, or other cause of action, regardless of whether there is an outstanding judgment for that sum.

  (6) “Debtor” means any individual, fiduciary, or business entity which may be entitled to receive a Maryland income tax refund and which owes money to, or has a delinquent account with, any State agency which has not been adjudged satisfied by court order, set aside by court order, or discharged in bankruptcy. “Debtor” and “taxpayer” are synonymous, when a match of names has been made by the Comptroller.

  (7) “Intercept” means the action of the Comptroller of withholding all or part of a tax refund due a taxpayer and remitting it to the Central Collection Unit.

  (8) “Office of Administrative Hearings” means the independent unit within the executive branch of State government that is responsible for conducting administrative hearings.

  (9) “Refund” means any taxpayer's Maryland Income Tax Refund.

  (10) “State agency” means any agency, association, board, bureau, college, commission, committee, council, foundation, fund, department, institute, institution, public corporation, service, trust, university, or other unit of State government, including any sub-unit of these agencies.

#### Regulation .02 Duties of the Central Collection Unit.

*COMAR 17.01.02.02*

A. The Central Collection Unit may certify to the Comptroller the existence of any debt which has been referred to the Unit for collection by a State agency or official unless the:

  (1) Debt is excepted by law from the Unit's jurisdiction under State Finance and Procurement Article, Title 3, Subtitle 3, Annotated Code of Maryland; or

  (2) Attorney General has advised the State agency, official, or the Central Collection Unit that the validity of the debt is legitimately in dispute.

B. The Central Collection Unit may not certify any account with a balance of $25 or less.

C. The certification shall:

  (1) Be made on or before November 1 for the tax refund payable the following year;

  (2) Provide the name, address, Social Security number, and any known aliases of the debtor certified;

  (3) Include an identification number and the total amount of the debt.

D. At least 30 calendar days before certification of a debt, the Central Collection Unit shall send the debtor written notice of the intention to certify the debt.

E. The written notice in §D of this regulation shall also advise the debtor of the:

  (1) Amount of the debt;

  (2) Basis for the debt;

  (3) Right to request an investigation of the validity of the debt;

  (4) Right to contest any adverse determination in a hearing before an administrative law judge; and

  (5) Right to judicial appeal in accordance with the Administrative Procedure Act.

#### Regulation .03 Duties of the Comptroller.

*COMAR 17.01.02.03*

A. As frequently as practical, the Comptroller shall compare the names of the debtors certified by the Central Collection Unit with the names of taxpayers who file tax returns and are entitled to a tax refund.

B. If a match is made between a taxpayer eligible for tax refund and a certified debtor, the Comptroller shall pay the refund to the Central Collection Unit, but only to the extent of the amount of the debt certified. Any refund in excess of a certified debt shall be paid by the Comptroller to the debtor.

C. If a match occurs with one of the parties to a joint or a combined-separate tax return, the Comptroller shall withhold only the portion of the refund attributable to the debtor.

D. The Comptroller shall remit to the Central Collection Unit payments withheld pursuant to this chapter. The Comptroller shall also provide the Central Collection Unit with a list identifying the debtors for whom remittance is made and the debtors for whom the Comptroller has determined that no intercept can be made. The list shall include each debtor's name, address, Social Security number or federal tax identification number, and an identification number.

E. The Comptroller shall notify a debtor for whom an intercept is made of the amount paid to the Central Collection Unit and of the debtor's right to request an investigation by the Central Collection Unit of the validity of the debt and to request an administrative hearing subject to judicial review in accordance with the Administrative Procedure Act.

F. The Comptroller shall delete a certified name or change names certified when instructed to do so by the Central Collection Unit.

#### Regulation .04 Investigation.

*COMAR 17.01.02.04*

A. Within 15 days from the date of the mailing of the notice of the Central Collection Unit's intention to certify the debtor's name or of the Comptroller's having intercepted the debtor's refund, a debtor has the right to request an investigation by the Central Collection Unit if the debtor disputes the validity or the amount of the debt.

B. The Central Collection Unit shall submit to the debtor a report of its findings within 15 days from the date that the request for investigation was received. The report shall include a notice of the right to request a hearing on the findings and the method of doing so in accordance with the Administrative Procedure Act.

C. If the investigation results in the reduction or elimination of the debt, the Central Collection Unit shall take corrective action as necessary, by correcting the certification, discontinuing the certification procedures, or remitting to the debtor any intercepted amounts in excess of the debt. Corrective action shall be taken within 30 days of the date on which the Central Collection Unit completes a report of its findings.

#### Regulation .05 Administrative Hearings.

*COMAR 17.01.02.05*

A. A debtor may contest the findings of the investigation as to the validity and the amount of the debt in a hearing before an administrative law judge and in accordance with the Administrative Procedure Act, State Government Article, §9-1601 and Title 10, Subtitle 2, Annotated Code of Maryland. A request for a hearing shall be submitted in writing to the Central Collection Unit within 30 days of the date on which the investigation report was mailed to the debtor.

B. In a hearing before an administrative law judge, a debtor may not raise any issue regarding the amount of tax refund otherwise due the taxpayer. This restriction does not prejudice any rights available to the debtor under the tax laws.

C. The Central Collection Unit may file a motion for the Office of Administrative Hearings to deny a request for a hearing.

D. Conduct of Hearings.

  (1) Within 15 days of receipt of a timely request for a hearing, a debtor shall be notified of the hearing date. The Office of Administrative Hearings shall designate the place for the hearing and shall notify the debtor at least 5 days in advance. If the debtor notifies the Office of Administrative Hearings that either the date or place designated is not convenient and requests a new date or place for the hearing and gives a valid reason, the Office of Administrative Hearings may designate another date or place.

  (2) A debtor may waive oral argument, in which case the hearing shall be conducted by a review of the record. A review of the record consists of a review of the relevant collection records and any written evidence submitted by the debtor.

  (3) At a hearing, a debtor has the right to have an attorney or other representative present to assist the debtor in accordance with State Government Article, §10-204, Annotated Code of Maryland.

  (4) A debtor has the right to:

    (a) Present witnesses;

    (b) Present documentary evidence;

    (c) Present oral argument;

    (d) Examine any documents presented by others as evidence at the hearing;

    (e) Cross-examine any witness.

  (5) A debtor may not raise any issues in a hearing that have been previously litigated, whether in court or in an administrative hearing.

  (6) Record of Hearing.

    (a) An administrative law judge shall make a record, containing the substance of what happened at the hearing, to be retained by the Central Collection Unit.

    (b) The record, together with all papers filed in the proceedings, and the administrative law judge's findings and conclusions, and decisions, constitutes the exclusive record and shall be available for review by a debtor or the debtor's representative at any reasonable time for a period of 2 years, or until all litigation on the intercept has ended, whichever is greater.

  (7) State agencies referring debts to the Central Collection Unit for intercept purposes only shall represent themselves at hearings.

  (8) A request for a hearing may be withdrawn by a debtor or representative at any time.

  (9) A request for a hearing is considered abandoned if a debtor or the debtor's representative fails to appear at the hearing and fails to notify the Office of Administrative Hearings within 5 days of the original hearing date of the desire to pursue the hearing.

E. Decision.

  (1) An administrative law judge shall prepare a written summary of findings of fact and conclusions of law based exclusively on the record, and shall issue a final decision within 90 days of the hearing according to the provisions of State Government Article, §10-214, Annotated Code of Maryland.

  (2) The date of a hearing is the date for calculating the amount of any debt considered in a decision.

  (3) If an administrative law judge determines that a debtor is incorrectly certified, the administrative law judge shall order the debtor's name deleted from the certification list, or order a reduction of the amount of the debt certified, whichever is appropriate.

  (4) Refund.

    (a) If an administrative law judge determines that no debt exists or that the amount intercepted is in excess of the amount due, the Central Collection Unit shall refund the full amount or the excess amount intercepted to a debtor.

    (b) If the Central Collection Unit files a timely appeal with the court, the refund shall be held by the Unit pending the outcome of the appeal.

F. Judicial Appeal.

  (1) A party aggrieved by an administrative law judge's decision is entitled to a judicial review in accordance with the Administrative Procedure Act, State Government Article, §10-215, Annotated Code of Maryland.

  (2) If a debtor disputes a denial of a claim for a refund by the Comptroller on grounds other than the validity of the debt or the correctness of the amount owed, and the debtor is appealing an adverse determination of the Maryland Tax Court under Tax-General Article, §13-532, Annotated Code of Maryland, then judicial review of both decisions shall be consolidated.