84(R) - 2015
House Economic & Small Business Development
House Economic & Small Business Development
Relating to recovery of covered unemployment compensation debt through participation in the federal Treasury Offset Program.
A fiscal note dated April 8, 2015 anticipates a two-year net impact to General Revenue Related Funds of $0 through the biennium ending August 31, 2017.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
The fiscal note adds that based on information provided by the Texas Workforce Commission, it is estimated that participation in the federal Treasury Offset Program would result in additional revenue to the state of $1,300,540 in General Revenue Dedicated Fund 165, $131,925 in General Revenue-Dedicated Fund 5128, and $145,943,630 in Other Fund 938 over the next five years. Estimates of fiscal impact assume a 12 percent collection rate from participation in the federal Treasury Offset Program on projected uncollected and covered contributions to unemployment compensation debt.
The agency anticipates that any costs associated with the implementation of the program can be absorbed in the current federal Unemployment Insurance grant.
House Bill 2732 would amend the Labor Code to allow the Texas Workforce Commission (TWC) to participate in the federal Treasury Offset Program and collect covered unemployment compensation debt listed in the bill.
Before submitting covered unemployment compensation debt for recovery under the program, the commission would have to notify the debtor, provide the debtor at least 60 days following the date the notice is provided to present to the commission evidence that all or part of the debt is either not legally enforceable, due to fraud or unreported earnings, or a contribution owed to the compensation fund.
TWC would have to consider the evidence submitted to determine the amount of debt that is legally enforceable and owed, and whether any part of it is subject to recovery through the program. TWC would not review the initial determination establishing the debtor's liability, though.
TWC would have to assess against the debtor the cost of any administrative fee charged by the United States Department of the Treasury for each offset. It would also add the assessed amount to the covered unemployment compensation debt that is offset under the program.
The second chamber sponsor is Senator Judith Zaffirini.
Vote Recommendation Notes
No amendments or modifications have been made to the bill since we reported on it. We continue to oppose it.
First chamber analysis below:
According to the Bureau of the Fiscal Service in the U.S. Department of the Treasury, "The Treasury Offset Program (TOP), operated by the Department of the Treasury’s Bureau of the Fiscal Service, is a fully-automated, centralized offset program that intercepts federal and state payments to collect delinquent debts owed to federal and state agencies. Federal agencies must notify TOP of all nontax debts delinquent more than 180 days. Federal disbursing officials must offset payments to collect such debts. States may offset their payments by entering into reciprocal offset agreements. The Internal Revenue Service (IRS) levies TOP to collect federal tax debts, at its discretion, under separate legal authorities from those authorizing administrative offset."
"In other words," according to a Forbes editoria
l on the subject, "the government gave itself the right to chase taxpayers for old debts indefinitely. And the easiest way to do it is through an offset."
The federal Treasury Offset Program House Bill 2732 would allow TWC to recover unemployment compensation debt from a person's federal tax return, considerably extending the scope of the workforce commission, and hence, of government. Additionally, since the agreement to participate in the program would be a reciprocal offset agreement, it would also have the potential to increase the reach of the federal government.
The fiscal note for House Bill 2732 indicates that according to the TWC, if this legislation does not pass, they would not be in compliance with federal law and could lose an estimated $638.5 million over a five-year period from the loss of the Unemployment Insurance administrative grant.
The potential loss of a federal grant should not be a reason to potentially increase the scope of government or infringe on individual liberty. As a consequence, we oppose House Bill 2732.