Title of Regulation: 24VAC30-160. Rules and Regulations to Comply with the Setoff Debt Collection Act (repealing 24VAC30-160-10 through 24VAC30-160-90).

Statutory Authority: §§ 33.2-215 and 58.1-526 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: May 26, 2021.

Effective Date: June 11, 2021.

Agency Contact: Jo Anne Maxwell, Director, Governance and Legislative Affairs, Department of Transportation, 1401 East Broad Street, Richmond, VA 23235, telephone (804) 786-1830, or email joanne.maxwell@vdot.virginia.gov.

Basis: Section 33.2-210 of the Code of Virginia authorizes the Commonwealth Transportation Board (CTB) to develop regulations relating to traffic and the use of systems of state highways. The CTB promulgated the Rules and Regulations to Comply with the Setoff Debt Collection Act (24VAC30-160) to comply with the Setoff Debt Collection Act.

Purpose: The Commonwealth Transportation Board originally adopted the regulation in 1984, and the regulation has not been amended since. However, all of the substantive portions that affect citizens are duplicative of provisions in the Setoff Debt Collection Act. Keeping the current administrative sections would be inefficient, confusing, and duplicative. VDOT currently is the only agency that has regulations regarding the Setoff Debt Collection Act. Since the Setoff Debt Collections Act describes the process sufficiently, there is no longer a need for 24VAC30-160. The repeal of the regulation will have no practical effect on public health, safety, or welfare.

Rationale for Using Fast-Track Rulemaking Process: The decision to repeal the regulation was made after a periodic review, pursuant to § 2.2-4007.1 of the Code of Virginia and Executive Order 14 (2018). All of the substantive portions of the regulation that affect citizens are duplicative of provisions in the Setoff Debt Collection Act, therefore the action is noncontroversial.

Substance: The current action will repeal 24VAC30-160.

Issues: The repeal will not substantively affect the public or the department because the regulation is duplicative of substantive provisions in the Setoff Debt Collection Act. There are no disadvantages to the public or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Commonwealth Transportation Board (Board) proposes to repeal 24VAC30-160 Rules and Regulations to Comply with the Setoff Debt Collection Act.

Background. The Virginia Debt Collection Act, § 2.2-4800, et seq., states that "Each state agency and institution shall take all appropriate and cost-effective actions to aggressively collect its accounts receivable."² The Setoff Debt Collection Act, § 58.1-520, et seq., establishes a method by which state agencies pursue collection via the withholding of state or local income tax refunds; § 58.1-525 of the Setoff Debt Collection Act provides for the impacted party to have the opportunity to give written notice of intent to contest the validity of the claim. Section 58.1-526 states that: If a claimant agency "receives written application of the debtor's intention to contest at a hearing the claim upon which the intended setoff is based, it shall grant a hearing according to procedures established by that agency under its operating statutes to determine whether the claim is valid. Additionally, it shall be determined at the hearing whether the claimed sum asserted as due and owing is correct, and if not, an adjustment to the claim shall be made."

Unlike most agencies, in 1984 the Department of Transportation (VDOT) promulgated a regulation pertaining to its rules and procedures in relation to setoff debt collection: 24VAC30-160, Rules and Regulations to Comply with the Setoff Debt Collection Act. Most of the regulation concerns hearings when the impacted party contests VDOT's claim. All parts of the regulation that are not duplicative of the Act concern such hearings. VDOT has a manual that covers debt setoff hearing procedures. The agency has indicated that it would send a copy of the manual to the debtor as an attachment to the acknowledgment letter that is sent when a written application of the debtor's intention to contest a claim is received.

In 2017, VDOT collected $371,929.62 against delinquent debts through setoff of tax return funds. In 2018, the agency collected $113,320.37. Through October 21, VDOT has collected $169,773.04 for the current year.³

Estimated Benefits and Costs. To the degree that regulations confer broader protections to the regulated community and provide greater transparency than internal policies and procedures, then the proposed repeal of the regulation has the potential to impact the public. However, in this instance, other than hearings, all rules and procedures concerning setoff debt collection are set forth within statutes. Specifics concerning hearings are covered in the manual that would be provided to affected individuals and entities.

Businesses and Other Entities Affected. The proposal affects individuals and entities who in VDOT's understanding owe debt to VDOT. The proposal does not substantively produce cost.

Localities⁴ Affected.⁵ The proposal does not disproportionately affect particular localities. The proposal does not introduce costs for local governments.

Projected Impact on Employment. The proposal is unlikely to affect total employment.

Effects on the Use and Value of Private Property. The proposal does not substantively affect the use and value of private property or real estate development costs.

Adverse Effect on Small Businesses.⁶ The proposed amendment does not adversely affect small businesses.

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¹Adverse impact is indicated if there is any increase in net cost or reduction in net revenue for any entity, even if the benefits exceed the costs for all entities combined.

²See § 2.2-4806 specifically: https://law.lis.virginia.gov/vacode/title2.2/
chapter48/section2.2-4806/

³Source: VDOT

⁴"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

⁵§ 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

⁶Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Agency's Response to Economic Impact Analysis: The agency agrees with the economic impact analysis prepared by the Department of Planning and Budget.

Summary:

The amendments repeal Rules and Regulations to Comply with the Setoff Debt Collection Act (24VAC30-160). The regulation is unnecessary as all of the substantive portions of the regulation that affect citizens are duplicative of provisions in the Setoff Debt Collection Act (§ 58.1-520, et seq. of the Code of Virginia).

Chapter 160

Rules and Regulations to Comply with the Setoff Debt Collection Act (Repealed)

24VAC30-160-10. Withholding refund; written notification. (Repealed.)

When the Department of Transportation (Transportation) is notified by the Department of Taxation (Taxation), that a debtor, identified by Taxation, is entitled to a refund and that the refund is being withheld pursuant to the operation of the Setoff Debt Collection Act, it shall mail a written notification to the debtor, certified mail, return receipt requested, copy to Taxation, within 10 days of notification.

That notice shall inform the debtor of (i) the amount of the debt certified to Taxation as due and owing, (ii) the basis for the claim to all or part of the refund, (iii) the intention of Transportation to seek to setoff the debt by credit of the available refund, (iv) the opportunity of the debtor to give written notice of intent to contest the validity of the claim before Transportation and of the requirement that this written notice be received at the designated office of Transportation within 30 days of the postmark date of the mailing of the notice by Transportation, and (v) the fact that failure to apply for a hearing within the 30-day period will be deemed a waiver of the opportunity to contest the claim resulting in final setoff by default.

24VAC30-160-20. Notice of hearing. (Repealed.)

Transportation shall, as soon as practicable after receiving notice of debtor's intention to contest a claim, set a hearing time and date and designate a hearing officer. Notice of the hearing shall be mailed to the debtor and other interested persons 15 days before the date of such hearing. If any of the parties cannot reasonably attend the hearing at the scheduled time and place, he should so inform the hearing officer. Upon receipt of such notice, the hearing officer shall decide whether or not a postponement will be granted. Notice of the time and place for the postponed or continued hearing shall be mailed to all parties 15 days before the date of such hearing.

24VAC30-160-30. Hearing officer. (Repealed.)

The commissioner, while reserving to himself the final determination on the validity of the debt asserted by Transportation and contested by the debtor, will appoint a hearing officer. It shall be the responsibility of the hearing officer to conduct a fair and impartial hearing. No person shall serve as a hearing officer in any debtor application contesting Transportation's claim who shall have been involved in the prior circumstances which have culminated in such dispute.

24VAC30-160-40. Hearing sites. (Repealed.)

Hearing sites shall be chosen with due regard to the various geographic regions of the Commonwealth where the debtor may reside. These hearings shall be held in a district office, residency office, toll facility administration building, or central office building of Transportation that is in the geographic region of the debtor's residence within the Commonwealth.

24VAC30-160-50. Conduct of hearing. (Repealed.)

Attendance at the hearing shall be limited to those persons necessary for the full disclosure of all relevant facts and circumstances. No issue may be considered at the hearing which previously has been litigated. All testimony at such hearing before the hearing officer shall be recorded by the hearing official, not by any other party, and need not be transcribed unless the claim is further appealed. The hearing officer shall control the order of proof, rule upon the admission of evidence, and may examine and cross-examine witnesses. The hearing officer shall have the right to require additional evidence, if he deems it necessary. The hearing officer may recess the hearing or continue it to another date for good cause shown. If neither the debtor nor his authorized representative appear at the time and place set for the hearing, without good cause, the hearing shall be considered abandoned.

24VAC30-160-60. Specific conduct of hearing. (Repealed.)

The hearing officer shall, at the hearing:

1. Identify those present for the record;

2. Declare the purpose of the hearing, the procedure to be followed, and how and by whom a decision is made and communicated to the debtor; and

3. Declare that the technical rules of evidence do not apply at the hearing, that the hearing officer may raise such issues as may appear from the evidence presented at the hearing, and that the hearing officer may require those parties to respond either at the hearing or at a subsequently agreed upon time.

24VAC30-160-70. Decision. (Repealed.)

The decision shall be sent to the commissioner who may accept, in full or in part, or reject the hearing officer's decision. A copy of the commissioner's determination and the hearing officer's decision shall be mailed to the debtor by certified mail and to Transportation's representative.

24VAC30-160-80. Appeals from determinations. (Repealed.)

Within 10 days after the receipt of the commissioner's determination, the debtor aggrieved thereby may secure judicial review, as provided by § 58.1-527 of the Code of Virginia.

24VAC30-160-90. Certification of debt; finalization of setoff. (Repealed.)

Upon final determination of the debt due and owing Transportation or upon the debtor's default for failure to comply with § 58.1-525 of the Code of Virginia, Transportation shall, within 20 days, certify the debt to Taxation and in default thereof, Taxation shall no longer be obligated to hold the refund for setoff. Upon receipt of a certified debt from Transportation, Taxation shall finalize the setoff by transferring the proceeds collected for credit or payment in accordance with the provisions of § 58.1-532 of the Code of Virginia and by refunding any remaining balance to the debtor as if setoff had not occurred.