N.Y. Tax Law § 171-F – Certain overpayments credited against outstanding debts owed to a state agency

(1) For the purposes of this section, (a) "state agency" shall mean any state department, board, bureau, division, commission, committee, public authority, public benefit corporation, council, office, or other governmental entity performing a governmental or proprietary function for the state, or, solely for purposes of this section, a local social services district; (b) "taxpayer" shall mean a corporation, association, company, partnership, estate, trust, liquidator, fiduciary or other entity or individual who or which is liable for any tax or other imposition imposed by or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thirty-B or thirty-three of this chapter or article two-E of the general city law, which tax or other imposition is administered by the commissioner of taxation and finance, or who or which is under a duty to perform an act under or pursuant to such tax or imposition, excluding a state agency, a municipal corporation or a district corporation; and (c) "overpayment" shall mean an overpayment which has been requested or determined to be refunded, a refund or a reimbursement, of a tax or other imposition imposed by or pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thirty-B or thirty-three of this chapter or article two-E of the general city law, which is administered by the commissioner of taxation and finance.
(2) The commissioner of taxation and finance, upon agreement with the state comptroller and acting as an agent for the state comptroller, shall set forth the procedures for crediting any overpayment by a taxpayer of any tax or other imposition imposed by or authorized to be imposed pursuant to article nine, nine-A, twenty-two, thirty, thirty-A, thirty-B or thirty-three of this chapter or article two-E of the general city law, which is administered by the commissioner of taxation and finance, and the interest on any such overpayments, against the amount of a past-due legally enforceable debt owed by such taxpayer to a state agency. An implementation plan shall be developed by the division of the budget and the department of taxation and finance which shall provide, but not be limited to, guidance with respect to coordination of debt collection pursuant to this section and subdivision twenty-seventh of section one hundred seventy-one of this article. This section shall not be deemed to abrogate or limit in any way the powers and authority of the state comptroller to set off debts owed the state against payments from the state, under the constitution of the state or any other law.
(3) For purposes of this section a past-due legally enforceable debt against which an overpayment and interest thereon may be credited shall include any applicable interest or late payment charge and is a debt:
(a) as to which the state has (i) obtained a judgment and (ii) given such notice as is required in subdivision (d) of section five thousand two hundred twenty-two of the civil practice law and rules; or
(b) as to which a state agency has (i) made a final administrative determination where the taxpayer had the opportunity for an adjudicatory proceeding to which article three of the state administrative procedure act is applicable, or the taxpayer had an opportunity for a proceeding which substantially complies with the requirements of such article three where such article three is not applicable, or the taxpayer was afforded such notice and opportunity to be heard as satisfies due process requirements applicable to such state agency and to such debt, except that if, pursuant to law or regulation, the debt is not collectible unless the state agency obtains a judgment, then the debt will not be considered a past-due legally enforceable debt for purposes of this section until such state agency has obtained a final judgment no longer subject to judicial review and (ii) which cannot be collected by administrative offset by the referring state agency against amounts payable to the taxpayer by the referring department; and
(c) with respect to which the state agency or the department of law has notified the taxpayer in writing, or has made a reasonable attempt to so notify the taxpayer at the taxpayer's last address known to such state agency (i) that the debt, which is clearly identified as to amount and nature, is past-due and unless paid within thirty days thereafter, would be referred to the department of taxation and finance to be offset against an overpayment; (ii) that state law permits the offset of certain overpayments against such debts; (iii) that the taxpayer may request a review of the proposed referral for offset by contacting the state agency at a telephone number or an address disclosed in the notice; and (iv) that the taxpayer may present, to the state agency, written evidence and arguments in support of his defense to the proposed referral or may appear at a scheduled conference with the state agency to present oral arguments and written and oral evidence in support of such defense; provided, however, that nothing herein shall be deemed to afford the taxpayer the opportunity to reargue any issue which was, or could have been, adjudicated in the proceeding described in paragraph (a) or (b) of this subdivision; and
(d) which the state agency which is the creditor or the department of law, as the case may be, certifies to the commissioner of taxation and finance is past-due and legally enforceable.
(4) The procedures set forth by the commissioner of taxation and finance for crediting any overpayments, and the interest on any such overpayments, against a past-due legally enforceable debt pursuant to this section shall include but shall not be limited to:
(a) the procedure under which the creditor state agency shall notify the commissioner of taxation and finance of a past-due legally enforceable debt due from a taxpayer, specifying when the department will be notified, the information to be contained in such notification and the form and format to be used for such notification;
(b) the minimum amount of a past-due legally enforceable debt against which the commissioner of taxation and finance shall credit an overpayment of tax;
(c) a provision providing that information furnished to the commissioner of taxation and finance and the comptroller pursuant to such procedures shall be considered confidential and shall not be disclosed, except as otherwise allowed in this chapter;
(d) a provision providing that information furnished by the commissioner of taxation and finance pursuant to such procedures shall be considered confidential and shall not be disclosed, except the amount of the overpayment and interest thereon which has been credited may be disclosed to the taxpayer, and the amount so credited and the information necessary to properly identify the taxpayer may be disclosed to the creditor state agency; and
(e) the procedure for reimbursement of the comptroller by the revenue arrearage account, pursuant to section ninety-one-a of the state finance law, for any overpayment and interest thereon which has been credited against the past-due legally enforceable debt owed by a taxpayer filing a joint return, but which has been refunded by the comptroller, pursuant to paragraph six of subsection (b) of section six hundred fifty-one of this chapter, to a spouse not liable for the amount of a past-due legally enforceable debt owed by such taxpayer. (5)(a) In calculating the amount of an overpayment and interest thereon which shall be credited against the amount of a past-due legally enforceable debt owed by a taxpayer which is certified to the department of taxation and finance for collection pursuant to this section, the department of taxation and finance shall first credit the overpayment and interest thereon against any:
1. (i) liability of such taxpayer in respect of any tax or other imposition imposed by this chapter and administered by the commissioner of taxation and finance;
2. (ii) liability of such taxpayer for any tax or other imposition imposed pursuant to the authority of this chapter or any other law if such tax is administered by the commissioner of taxation and finance;
3. (iii) estimated tax for the succeeding taxable year if such taxpayer claims such overpayment or a portion thereof as a credit against estimated tax for such succeeding taxable year pursuant to subsection (e) of section six hundred eighty-six or subsection (b) of section one thousand eighty-six of this chapter or subdivision (e) of section 11-1786 of the administrative code of the city of New York or for any tax imposed pursuant to the authority of this chapter or any other law if such tax is administered by the commissioner of taxation and finance;
4. (iv) past-due support owed by the taxpayer pursuant to section one hundred seventy-one-c of this article;
5. (v) unreimbursed medical assistance paid on behalf of a child payable pursuant to section three hundred sixty-seven-a of the social services law;
6. (vi) the amount of a default in repayment of a state university or city university loan pursuant to section one hundred seventy-one-e of this article.
7. (b) Only the balance remaining, after the overpayment and the interest thereon has been credited as described in paragraph (a) of this subdivision, shall be certified to the comptroller as an overpayment plus any interest to be credited, in accordance with paragraph (g) of subdivision three of section one hundred seventy-one-l of this article, against a past-due legally enforceable debt that has been certified to the commissioner of taxation and finance for collection pursuant to this section, and/or a city of New York tax warrant judgment debt that has been certified to the commissioner of taxation and finance for collection pursuant to section one hundred seventy-one-l of this article, with the remainder to be refunded to the taxpayer if such remainder is not required to satisfy the amount of a default in repayment of a guaranteed student loan pursuant to section one hundred seventy-one-d of this article. If a taxpayer owes past-due legally enforceable debt that has been certified to the commissioner of taxation and finance for collection pursuant to this section and city of New York tax warrant judgment debt that has been certified to the commissioner of taxation and finance for collection pursuant to section one hundred seventy-one-l of this article, then the overpayment and interest thereon shall be credited against the debts in the order in which the debts accrued.
8. (b-1) No taxpayer who has applied for, and is eligible for, an earned income tax credit under subsection (d) of section six hundred six of this chapter shall have more than ten percent of any tax overpayment credited against a past due legally enforceable debt owed to the office of temporary and disability assistance for an overpayment of public assistance unless such debt was incurred as a result of false or misleading statements or other grounds set forth in section one hundred forty-five-c of the social services law, which led to a sanction under such section.
9. (c) If a taxpayer owes more than one past-due legally enforceable debt which is certified to the commissioner of taxation and finance for collection pursuant to this section, the overpayment and interest thereon shall be credited against the debts in the order in which the debts accrued. A debt shall be considered to have accrued at the time at which the debt became past-due.
10. (6) The commissioner shall (a) certify to the comptroller the amount of each overpayment and the interest on such amount to be credited against each past-due legally enforceable debt pursuant to this section, the total amount of each such overpayment and the interest on each such overpayment, and the balance, if any, of each such overpayment and interest thereon to be refunded to the taxpayer, and (b) shall certify to the comptroller, with regard to each such past due legally enforceable debt, the amount of liability underlying such debt which is creditable to unemployment insurance tax, federal funds, federal trust funds or fiduciary funds, or to the office of temporary and disability assistance or a local social services district relating to overpayment of grants and allowances of public assistance or to the department of health relating to overpayments of medical assistance made to individuals who are or have been enrolled as providers in the New York state medical assistance program as established under title eleven of article five of the social services law.
11. (7) The commissioner of taxation and finance shall notify each taxpayer who makes an overpayment, in writing, of the amount of such overpayment and the interest thereon certified to the comptroller as an amount to be credited against a past-due legally enforceable debt which has been certified to the commissioner of taxation and finance pursuant to this section and of the name of the state agency which certified the amount to the commissioner of taxation and finance. Such notice shall include notification to any other person who may have filed a joint return with the taxpayer of the steps such other person may take in order to secure his or her proper share of the refund.
12. (8) From the time the commissioner of taxation and finance is notified by a creditor state agency of a past-due legally enforceable debt due from a taxpayer, the commissioner of taxation and finance shall be relieved from all liability to such taxpayer or its assigns, successors, heirs or representatives for the amount of an overpayment and interest on such amount certified to the comptroller, to be credited against the amount of a past-due legally enforceable debt to be collected pursuant to this section, and such taxpayer shall have no right to commence a court action or proceeding or to any other legal recourse against the commissioner of taxation and finance to recover such overpayment or any interest thereon certified to the comptroller to be credited against the amount of a past-due legally enforceable debt. Provided, however, nothing herein shall be construed to preclude any legal, equitable, or administrative action by such taxpayer against the certifying state agency to which the amount of overpayment and any interest thereon was credited, with reference to the amount thereof which is greater than the amount of such past-due legally enforceable debt owed by such taxpayer on the date of such certification.