Reciprocal Agreements with Other States for Tax Refund Offsets

PURPOSE: This rule allows the department to enter into reciprocal agreements to offset income tax refunds for state debts and establishes the requirements for such agreements. (1) In general, the department may enter into reciprocal agreements with other states to set off any income tax refund due any individual taxpayer of Missouri for debts of any other state that agrees to do the same for Missouri. (2) Definition of Terms. (A) Certified debt—A debt, as that term is defined in section 143.782(2), RSMo, certified by one (1) state to another state to be eligible for a refund offset under the laws of the state referring the debt. (B) Debtor—See section 143.782(3), RSMo. (C) Reciprocal agreement—An agreement between Missouri and another state for each state to offset tax refunds due to a taxpayer of the state against debts owed by the taxpayer to the other state. (D) Refund—See section 143.782(5), RSMo. (3) Basic Application. (A) All reciprocal agreements will provide— 1. Each state will offset individual income tax refunds due taxpayers of the state for certified debts of the other state; 2. The state referring a debt (referring state) will certify that the debt is eligible for offset under the laws of the referring state; 3. The offsetting state will give notice of the offset to the taxpayer as required by the law of the offsetting state; 4. Each state will bear its own costs and neither state will charge the other state; 5. If a taxpayer is entitled to a return of any portion of a tax refund that has been offset, the referring state will return the amount due to the taxpayer; 6. Debts owed to the offsetting state will be offset before debts owed to the referring state; 7. Each state will comply with all applicable state and federal confidentiality laws, regulations, and policies, including section 32.057, RSMo; 8. Either party may immediately terminate the agreement if the other party breaches the confidentiality provisions of the agreement; 9. The method of exchange of information and the method of offsetting the tax refund; 10. Neither state will certify a debt of less than twenty-five dollars ($25) for a tax refund offset; and 11. The offsetting state will provide notice to a nonobligated spouse of the non-obligated spouse’s right to challenge the offset when a tax refund offsets against a joint or combined return. The notice will comply with the offsetting state’s requirements for due process. (B) A reciprocal agreement may contain any other terms that do not conflict with any required terms. AUTHORITY: section 143.784.5, RSMo 2000.* Original rule filed June 10, 2010, effective Dec. 30, 2010. *Original authority: 143.784, RSMo 1982, amended 1984, 1993, 1994.