DAR File No. 43801

Administrative Services, Debt Collection

Rule R21-1

Transfer of Collection Responsibility of State Agencies

Notice of Proposed Rule

(Amendment)

DAR File No.: 43801
Filed: 06/13/2019 12:36:53 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The revisions to this rule clarify debt collection responsibilities and processes for state agencies. Section R21-1-6 modifications create a requirement for state agencies to pass information necessary for the Office of State Debt Collection to be able to collect on the debt. Section R21-1-7 clarifies, but does not change, how penalties, interest, and administrative costs are applied to payments on debts, including "Trust" debts owed to victims of crime. These revisions do not change any rates charged to debtors.

Summary of the rule or change:

These amendments add language to better clarify the collection responsibility, and the penalty percentage that will be added to account receivables when payments are delinquent.

Statutory or constitutional authorization for this rule:

• Subsection 63A-3-502(3)(m)
• Subsection 63A-3-502(4)(g)
• Subsection 63A-3-502(6)(a)
• Subsection 63A-3-502(6)(b)
• Subsection 63A-3-502(7)(f)

Anticipated cost or savings to:

the state budget:

Except for Section R21-1-6, these revisions clarify but do not change current practices that would impact costs to the state. Section R21-1-6 requires state agencies to pass on certain information to the Office of State Debt Collection (Office). Agencies may incur additional costs to provide this information if they are not currently providing it. The Office cannot measure what the additional cost, if any, will be to state agencies.

local governments:

These rule changes will not result in any additional costs to the local governments. None of these revisions impact local governments.

small businesses:

These revisions clarify, but do not change current practice. Therefore, it should not impact the costs to small businesses who owe money.

persons other than small businesses, businesses, or local governmental entities:

These revisions clarify, but do not change current practice. Therefore, it should not impact the costs to other persons who owe money.

Compliance costs for affected persons:

There is no compliance cost for affected persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

I have reviewed these changes with the Division of Finance Director and believe that these changes are reasonable and warranted.

Tani Downing, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Administrative Services
Debt Collection
Room 4130 STATE OFFICE BLDG
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Cory Weeks at the above address, by phone at 801-538-3100, by FAX at , or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/31/2019

This rule may become effective on:

08/07/2019

Authorized by:

John Reidhead, Director

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs	FY 2020	FY 2021	FY 2022
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Person	$0	$0	$0
Total Fiscal Costs:	$0	$0	$0
Fiscal Benefits
State Government	$0	$0	$0
Local Government	$0	$0	$0
Small Businesses	$0	$0	$0
Non-Small Businesses	$0	$0	$0
Other Persons	$0	$0	$0
Total Fiscal Benefits:	$0	$0	$0
Net Fiscal Benefits:	$0	$0	$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non - Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

These rule changes will have no effect on non-small businesses.

 

The Executive Director of the Department of Administrative Services, Tani Downing, has reviewed and approved this fiscal analysis.

 

 

R21. Administrative Services, Debt Collection.

R21-1. Transfer of Collection Responsibility of State Agencies.

R21-1-1. Purpose.

The purpose of this rule is to establish the procedures by which agencies shall bill and make initial collection efforts according to a coordinated schedule, the method to be used by agencies to transfer their delinquent accounts receivable to the Office or its designee for additional collection action, write-off of receivables, and the procedures and allocation of costs of collection established pursuant to Subsections 63A-3-502(4)(g), 63A-3-502(6)(b), Section 15-1-4,Utah Code, and by the Legislature in applicable laws.

 

R21-1-2. Authority.

This rule is established pursuant to Subsections 63A-3-502(3)(m), 63A-3-502(7)(f), 63A-3-502(4)(g), 63A-3-502(6)(b), Section 15-1-4, [Utah Code and the Office intent language ]and fees authorized by the Legislature in applicable laws. Subsection 63A-3-502(3)(m) authorizes the Office to establish procedures for writing off accounts receivable for accounting and collection purposes. Subsection 63A-3-502(7)(f) authorizes the Office to require state agencies to bill and make initial collection efforts of its receivables up to the time the accounts must be transferred. Subsection 63A-3-502(7)(a) authorizes the Office to require state agencies to transfer collection responsibility to the Office or its designee according to time limits specified by the Office. Subsection 63A-3-502(4)(g) authorizes Office to establish a fee to cover the administrative costs of collection, a late penalty fee and an interest charge by following the procedures and requirements of Section 63J-1-504. Subsection 63A-3-502(6)(b) prohibits the Office from assessing the interest charge established by the Office under Subsection 63A-3-502(4)(g) on an account receivable subject to the postjudgment interest rate established by Section 15-1-4. Section 15-1-4 requires civil and criminal judgments of the district court and justice court to bear interest at the federal postjudgment interest rate plus 2% and sets forth the procedures to be followed. The annual Appropriation Act authorizes the fees charged by the Office to collect accounts and allows[provides legislative intent language allowing] the costs of collection to be collected from the debtor.

 

R21-1-3. Definitions.

In addition to terms defined in Section 63A-3-501, the following terms are defined below as follows:

(1) "Delinquent" means any account receivable for which the state has not received payment in full by the payment demand date.

(2) "Designee" means a Private Sector Collector or State Agency that the Office of State Debt Collection has contracted with to provide accounts receivable collection services.

(3) "Payment demand date" is the date by which the agency requires payment for the account receivable that an entity has incurred.

(4) "Skipped" means that the entity formerly transacting business with the state is not known at the address or telephone number previously used nor is any new address or telephone number known of the entity.

(5) "Event" is the day the goods are purchased, services completed, fines, fees, and assessments are due, etc.

(6) "Trust" means a receivable that is owed to a victim of a crime.

 

R21-1-4. Agency Billing and Collection Responsibility.

Pursuant to Subsection 63A-3-502(3)(b), (d), and (f) as provided by Subsection 63G-3-201, state agencies shall document and track agency receivables on the State's central accounting system (FINET)[the state's Advanced Receivable Subsystem] unless the state agency has received an exemption from the Division of Finance and Office of State Debt Collection. If a state agency receives such an exemption, the state agency shall track their receivables on the agency system and provide the Office with quarterly receivable reports pursuant to 63A-3-502(7)(g). The receivable reports are due to Office no later than 45 days after the end of the quarter.

State agency customers shall be billed within 10 days from the event creating the receivable or the next billing cycle, if reoccurring. The payment demand date shall be no later than 30 days from the event date unless the state agency can demonstrate the 30 day demand date is not appropriate for the agency's business processes. State agencies shall contact customers for payment by phone or written notice when payment is not received within 10 days after the payment demand date.

The Office has published guidelines for billing receivables and collecting delinquent accounts. These guidelines include this rule and the statewide accounting FIACCT 06 policies available on the Division of Finance website, finance.utah.gov.[are included in the document entitled "Statewide Guidelines for Accounting, Reporting and Collecting Accounts Receivable". This document is available at the Office of State Debt Collection, Room 4130 State Office Building, Salt Lake City, Utah, during regular working hours, for review.]

 

R21-1-5. Transfer of Collection Responsibility.

Each state agency with delinquent accounts shall comply with the provisions of Section 63A-3-502, et seq. unless prohibited by current state or federal statute or regulation. A state agency or user of the Office of State Debt Collection services shall transfer collection responsibility to the Office, or its designee, when the account receivable is not paid within 90 days of the [event]initial billing or is delinquent 61 days. A state agency can negotiate a different receivable transfer date with the Office by demonstrating how the state benefits from the negotiated transfer date.[Office recommendations related to the transfer of collection responsibility can be found in the Office publication "Statewide Guidelines for Accounting, Reporting and Collecting Accounts Receivable".]

 

R21-1-6. Format for Transfer of Accounts Receivable Data.

(a) State agencies shall transfer delinquent accounts to the Office or its designee electronically through FINET.[the state's Advanced Receivable Subsystem.] State agencies exempted from using FINET for individual receivables[the state's Advanced Receivable Subsystem] shall work with the Office to generate an electronic placement file for placing accounts.

(b) Debts owed by business entities must be transferred by State agencies with:

(1) a list of positively identified liable parties.

(2) Federal tax identification numbers for each liable party.

 

R21-1-7. Costs of Collection.

Pursuant to Subsections 63A-3-502(4) (g), Section 15-1-4, Utah Code, and by the legislature in applicable laws, the Office shall charge penalty, interest, and administrative costs of collection and shall collect these costs in addition to the receivable balance from the debtor. The fee calculation and payment priority shall be applied according to the following methodology.

(a) Pursuant to 63A-3-502(4)(g)(i), the costs of collection shall be charged on all accounts referred for collection and the cost shall be calculated based on the dollars collected times the rate authorized by the legislature. The cost of collection shall be paid first from each payment.

(b) The Penalty shall be calculated as a percent of the receivable balance referred for collection. [A]Two percent of each payment shall be applied to the outstanding penalty until the penalty is paid in full. The penalty payment shall be calculated [based on]up to the authorized penalty percent set annually by the legislature, times the received payment amount. The calculated penalty amount shall be paid after the costs of collection are determined and paid.

(c) Two types of interest shall be charged on accounts referred to the Office. Postjudgment interest as established by Section 15-1-4, Utah Code, applies to receivables with judgments established by the courts with a sentencing date subsequent to May 5, 1999. Postjudgment interest accrues on the unpaid judgment balance of the receivable. Postjudgment interest that accrues on a trust or the trust portion of a receivable, shall be paid subsequent to the state's outstanding receivable. All other state receivables referred to the Office are charged an interest charge pursuant to 63A-3-502 (4) (g)(iii)(B), Utah Code. This interest is referred to as OSDC interest. OSDC accrued interest shall be paid from each payment up to 5% of the payment after the payment of the costs of collection and [the]2% penalty except on trust receivables or receivables including a trust account.

(d) Each payment received on trust receivables shall be applied to the following items in the priority listed until the payment is fully disbursed: 1st - cost of collection, 2nd - 2% penalty, 3rd - the trust receivable balance up to the total amount of the receivable, and 4th - the accrued postjudgment interest.

(e) Each payment received on receivables that include trust(s) and state receivable balances shall be applied to the following items in the priority listed until the payment is fully disbursed: 1st - cost of collection, 2nd 2% - penalty, 3rd - the trust(s) receivable balance until paid in full, 4th - accrued post-judgment or OSDC interest on the state receivable balance, 5th - the state receivable balance, and 6th - the accrued trust post-judgment interest.

(f) Each payment received on receivables owed only to the state shall be applied to the following items in the priority listed until the payment is fully disbursed: 1st - cost of collection, 2nd 2% - penalty payment, 3rd - 5% accrued post-judgment or OSDC interest, and 4th - the receivable balance.

(g) Trust Payments sent to victims of crimes that are returned to the Office because of bad addresses, shall be [reversed from the trust account and applied to amounts owed the state on the account. After the state debt is liquidated, payments shall be applied to the trust and if the victim still cannot be located, the payments shall be ]retained by the Office, until the victim is located or statute requires transfer to another State agency. Regardless, payments shall continue to be applied to the trust balance(s) until liquidated, and there after applied to State debt.[division of Finance for the appropriate time and then sent to Unclaimed Property and thereafter to Crime Victims Reparation.]

 

R21-1-8. Write Off of Accounts Receivable.

State agencies shall follow the statewide Accounting Policies and Procedures outlined in FIACCT 06-01.14 and 06-02.04, available from the state Division of Finance at finance.utah.gov.

 

R21-1-9. Original Signature Required on Certain Office of State Debt Collection (OSDC) Documents.

An Original Signature is Required by the Office of State Debt Collection (OSDC) on the following documents:

(1) Victim Settlement Agreement

(2) OSDC Debt Repayment Contract Agreement

(3) Wage Assignments to pay debts

(4) Authority for the automatic transfer of funds (EFT) to pay debts

(5) Authority for the automatic Credit/Debit Card charge to pay debts

 

KEY: accounts receivable, collection transfer

Date of Enactment or Last Substantive Amendment: [September 7, 2012]2019

Notice of Continuation: June 7, 2017

Authorizing, and Implemented or Interpreted Law: 63A-3-502(3)(m); 63A-3-502(4)(g); 63A-3-502(6)(a); 63A-3-502(6)(b); 63A-3-502(7)(f); 15-1-4