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AN ACT

RELATING TO WORKERS' COMPENSATION; AMENDING THE TAX REFUND

INTERCEPT PROGRAM ACT TO INCLUDE CERTAIN DEBTS BY EMPLOYERS

INCURRED UNDER THE WORKERS' COMPENSATION ACT OR THE WORKERS'

COMPENSATION ADMINISTRATION ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-2C-2 NMSA 1978 (being Laws 1985,

Chapter 106, Section 2, as amended) is amended to read:

"7-2C-2. PURPOSE.--

A. The purpose of the Tax Refund Intercept Program

Act is to comply with state and federal law:

(1) by enhancing the enforcement of child

support and medical support obligations;

(2) to aid collection of outstanding debts

owed for:

(a) overpayment of public assistance

and overissuance of food stamps;

(b) overpayment of unemployment

compensation benefits and nonpayment of contributions or

payments in lieu of contributions or other amounts due under

the Unemployment Compensation Law;

to the uninsured employers' fund under the Workers'

Compensation Act; and

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(d) nonpayment of the workers'

compensation fee due under the Workers' Compensation

Administration Act;

(3) to promote repayment of educational

loans;

(4) to aid collection of fines, fees and

costs owed to the district, magistrate and municipal courts;

(5) to aid collection of fines, fees and

costs owed to the Bernalillo county metropolitan court; and

(6) to aid in the payment to the state

investment officer of film production tax credit amounts owed

to the state investment officer due to loans made against the

credit pursuant to Subsection D of Section 7-27-5.26 NMSA

1978.

B. Efforts to accomplish the purpose of the Tax

Refund Intercept Program Act may be enhanced by establishing

a system to collect debts, in particular, outstanding child

support obligations, educational loans, amounts due under the

Unemployment Compensation Law, the Workers' Compensation Act

and the Workers' Compensation Administration Act, fines, fees

and costs owed to the district, magistrate and municipal

courts, film production tax credit amounts owed to the state

investment officer and fines, fees and costs owed to the

Bernalillo county metropolitan court, by setting off the

amount of such debts against the state income tax refunds or

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film production tax credit amounts due the debtors."

Section 2. Section 7-2C-3 NMSA 1978 (being Laws 1985,

Chapter 106, Section 3, as amended) is amended to read:

"7-2C-3. DEFINITIONS.--As used in the Tax Refund

Intercept Program Act:

A. "claimant agency" means the taxation and

revenue department or any of its divisions, the human

services department, the employment security division of the

labor department, the workers' compensation administration,

any corporation authorized to be formed under the Educational

Assistance Act, a district, magistrate or municipal court or

the Bernalillo county metropolitan court;

B. "debt" means a legally enforceable obligation

of an employer subject to the Unemployment Compensation Law,

the Workers' Compensation Act and the Workers' Compensation

Administration Act, or an individual to pay a liquidated

amount of money that:

(1) is equal to or more than one hundred

dollars ($100);

(2) is due and owing a claimant agency,

which a claimant agency is obligated by law to collect or

which, in the case of an educational loan, a claimant agency

has lawfully contracted to collect;

(3) has accrued through contract, tort,

subrogation or operation of law; and

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(4) either:

(a) has been secured by a warrant of

levy and lien for amounts due under the Unemployment

Compensation Law or workers' compensation fees due under the

Workers' Compensation Administration Act; or

(b) has been reduced to judgment for

all other cases;

C. "debtor" means any employer subject to the

Unemployment Compensation Law, the Workers' Compensation Act

and the Workers' Compensation Administration Act, or any

individual owing a debt;

D. "department" or "division" means, unless the

context indicates otherwise, the taxation and revenue

department, the secretary of taxation and revenue or any

employee of the department exercising authority lawfully

delegated to that employee by the secretary;

E. "educational loan" means any loan for

educational purposes owned by a public post-secondary

educational institution or owned or guaranteed by any

corporation authorized to be formed under the Educational

Assistance Act;

F. "medical support" means amounts owed to the

human services department pursuant to the provisions of

Subsection B of Section 40-4C-12 NMSA 1978;

G. "public post-secondary educational institution"

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means a publicly owned or operated institution of higher

education or other publicly owned or operated post-secondary

educational facility located within New Mexico;

H. "spouse" means an individual who is or was a

spouse of the debtor and who has joined with the debtor in

filing a joint return of income tax pursuant to the

provisions of the Income Tax Act, which joint return has

given rise to a refund that may be subject to the provisions

of the Tax Refund Intercept Program Act; and

I. "refund" means a refund, including any amount

of tax rebates or credits, under the Income Tax Act or the

Corporate Income and Franchise Tax Act that the department

has determined to be due to an individual or corporation."

Section 3. Section 7-2C-6 NMSA 1978 (being Laws 1985,

Chapter 106, Section 6, as amended) is amended to read:

"7-2C-6. PROCEDURES FOR SETOFF--NOTIFICATIONS TO

DEBTOR.--

A. Each year a claimant agency seeking to collect

a debt through setoff shall notify the department in the

manner and by the date required by the department, which date

shall be in the period from November 1 through December 15.

The notice to the department shall include the amount of the

debt, the name and identification number of the debtor and

such other information as the department may require. The

notice shall also include certification that the debt is due

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and owing the claimant agency or that the claimant agency is

obligated by law to collect the debt. This notice shall be

effective only to initiate setoff against refunds that would

be made in the calendar year subsequent to the year in which

notification is made to the department.

B. The claimant agency shall inform the department

within one week of any changes in the status of any debt

submitted by the claimant agency for setoff.

C. Upon proper and timely notification from the

claimant agency, the department shall determine whether the

debtor is entitled to a refund of at least fifty dollars

($50.00). The department shall notify the claimant agency in

writing, or in such other manner as the department and the

claimant agency may agree, with respect to each debt accepted

for setoff whether the debtor is due a refund of fifty

dollars ($50.00) or more and, if so, the amount of refund,

the address of the debtor entered upon the return and, if the

refund arises from a joint return, the name and address of

the spouse as entered upon the return.

D. Within ten days after receiving the

notification from the department pursuant to Subsection C of

this section, the claimant agency shall send a notice by

first class mail to the debtor at the debtor's last known

address. The notice required by this subsection shall

include:

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(1) a statement that a transfer of the

refund will be made and that the claimant agency intends to

set off the amount of the transfer against a claimed debt;

(2) the amount of the debt asserted and a

description of how the debt asserted arose;

(3) the name, address and telephone number

of the claimant agency;

(4) the amount of refund to be set off

against the debt asserted;

(5) a statement that the debtor has thirty

days from the date indicated on the notice to contest the

setoff by applying to the claimant agency for a hearing with

respect to the validity of the debt asserted by that agency;

and

(6) a statement that failure of the debtor

to apply for a hearing within thirty days will be deemed a

waiver of the opportunity to contest the setoff and to a

hearing.

E. If the refund against which a debt is intended

to be set off results from a joint tax return, the claimant

agency shall send a notice by first class mail to the spouse

named on the return within ten days after receiving the

notification from the department pursuant to Subsection C of

this section. The notice to the spouse shall contain the

following information:

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(1) a statement that a transfer of the

refund will be made and that the claimant agency intends to

set off the amount of the transfer against a claimed debt;

(2) the total amount of the refund and the

amount of each claimed debt;

(3) the name, address and telephone number

of the claimant agency;

(4) a statement that no debt is claimed

against the spouse and that the spouse may be entitled to

receive all or part of the refund regardless of the claimed

debt against the debtor spouse;

(5) a statement that to assert a claim to

all or part of the refund, the spouse shall apply to the

claimant agency for a hearing within thirty days from the

date indicated on the notice with respect to the entitlement

of the spouse to all or part of the refund from which a

transfer will be made at the request of the claimant agency;

and

(6) a statement that failure of the spouse

to apply for a hearing within thirty days may be deemed a

waiver of any claim of the spouse with respect to the refund.

F. A debtor may contest the setoff of a debt by

applying to the claimant agency for a hearing within thirty

days of the date the notice required by Subsection D of this

section is sent to the debtor. Failure of the debtor to

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apply for a hearing within the time required shall constitute

a waiver of the right to contest the debt or the setoff of

the debt.

G. A spouse may contest the setoff of a debt

against a refund to which the spouse claims entitlement in

whole or in part by applying to the claimant agency for a

hearing within thirty days of the date the notice required by

Subsection E of this section was sent to the spouse. Failure

of the spouse to apply for a hearing within the time required

shall constitute a waiver of the right to contest the setoff

of the debt against a refund to which the spouse may claim

entitlement.

H. The department shall apply against the refund

the amount of the claimed debt, not to exceed the amount of

the refund, and shall transfer that amount to the claimant

agency with an accounting of the amount transferred. When

the amount of refund due exceeds the amount of all applied

debts, the department shall treat the excess as it does other

refunds relating to income taxes.

I. Whether or not the refund due the debtor

exceeds the amount of the applied debt, the department shall

notify the debtor at the time of the transfer to the claimant

agency of:

(1) the fact of the transfer and that the

claimant agency intends to set off the amount of the transfer

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against the asserted debt;

(2) the total amount of the refund;

(3) the amount of debt asserted by the

claimant agency; and

(4) the name, address and telephone number

of the claimant agency.

J. Once the department has sent to the debtor the

notice required by Subsection I of this section, together

with any excess of the amount of refund over the amount of

asserted debts, the department shall be deemed to have made

the refund required by the Income Tax Act or the Corporate

Income and Franchise Tax Act."

Section 4. Section 7-2C-11 NMSA 1978 (being Laws 1985,

Chapter 106, Section 11, as amended) is amended to read:

"7-2C-11. PRIORITY OF CLAIMS.--

A. Claims of the department take precedence over

the claim of any competing claimant agency, whether the

department asserts a claim or sets off an asserted debt under

the provisions of the Tax Refund Intercept Program Act or

under the provisions of any other law that authorizes the

department to apply amounts of tax owed against any refund

due an individual pursuant to the Income Tax Act.

B. After claims of the department, claims shall

take priority in the following order before claims of any

competing claimant agency:

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(1) claims of the human services department

resulting from child support enforcement liabilities;

(2) claims of the human services department

resulting from medical support liabilities;

(3) claims resulting from educational loans

made under the Educational Assistance Act;

(4) claims of the human services department

resulting from AFDC liabilities;

(5) claims of the human services department

resulting from food stamp liabilities;

(6) claims of the employment security

division of the labor department arising under the

Unemployment Compensation Law;

(7) claims of a district court for fines,

fees or costs owed to that court;

(8) claims of a magistrate court for fines,

fees or costs owed to that court;

(9) claims of the Bernalillo county

metropolitan court for fines, fees or costs owed to that

court;

(10) claims of a municipal court for fines,

fees or costs owed to that court; and

(11) claims of the workers' compensation

administration arising under the Workers' Compensation Act or

the Workers' Compensation Administration Act."

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Section 5. APPLICABILITY.--The provisions of this act

apply to tax refunds issued on or after January 1, 2007.