421.17A - ADMINISTRATIVE LEVY AGAINST ACCOUNTS. - Iowa Statutes

421.17A ADMINISTRATIVE LEVY AGAINST ACCOUNTS. 1. Definitions. As used in this section, unless the context otherwise requires: a. "Account" means "account" as defined in section 524.103, "share account or shares" as defined in section 534.102, or the savings or deposits of a member received or being held by a credit union, or certificates of deposit. "Account" also includes deposits held by an agent, a broker-dealer, or an issuer as defined in section 502.102. However, "account" does not include amounts held by a financial institution as collateral for loans extended by the financial institution. b. "Bank" means "bank", "insured bank", and "state bank" as these are defined in section 524.103. c. "Credit union" means "credit union" as defined in section 533.102. d. "Facility" means the centralized debt collection facility of the department of revenue established pursuant to section 421.17, subsection 27. e. "Financial institution" includes a bank, credit union, or savings and loan association. "Financial institution" also includes an institution which holds deposits for an agent, broker-dealer, or an issuer as defined in section 502.102. f. "Obligor" means a person who is indebted to the state or a state agency for any delinquent accounts, charges, fees, loans, taxes, or other indebtedness due the state or indebtedness being collected by the state. g. "Savings and loan association" means "association" as defined in section 534.102. h. "Working days" means Monday through Friday, excluding the holidays specified in section 1C.2, subsection 1. 2. Purpose and use. a. Notwithstanding other statutory provisions which provide for execution, attachment, garnishment, or levy against accounts, the facility may utilize the process established in this section to collect delinquent accounts, charges, fees, loans, taxes, or other indebtedness due the state or being collected by the state provided that any exemptions or exceptions which specifically apply to enforcement of such obligations also apply to this section. Administrative levy under this section is the equivalent of condemning funds under chapter 642. It is expressly provided that these remedies shall be cumulative and that no action taken by the director or attorney general shall be construed to be an election on the part of the state or any of its officers, employees, or representatives to pursue any other remedy provided by law. b. An obligor is subject to this section if the obligor's debt is being collected by the facility. c. Any amount forwarded by a financial institution under this section shall not exceed the delinquent or accrued amount of the obligor's debt being collected by the state. 3. Notice of intent to obligor. The facility may proceed under this section only if twenty days' notice has been provided by regular mail to the last known address of the obligor, notifying the obligor that the obligor is subject to this section and of the facility's intention to use the levy process. The twenty days' notice period shall not be required if the facility determines that the collection of past due amounts would be jeopardized. 4. Verification of accounts and immunity from liability. a. The facility may contact a financial institution to obtain verification of the account number, the names and social security numbers listed for the account, and the account balance of an account held by an obligor. Contact with a financial institution may be by telephone or by written communication. The financial institution may require positive voice recognition and may require the telephone number of the authorized person from the facility before releasing an obligor's account information by telephone. b. The financial institution is immune from any civil or criminal liability which might otherwise be incurred or imposed for information released by the financial institution to the facility pursuant to this section. c. The financial institution or the facility is not liable for the cost of any early withdrawal penalty of an obligor's certificate of deposit. 5. Administrative levy -- notice to financial institution. a. If an obligor is subject to this section, the facility may initiate an administrative action to levy against an account of the obligor. b. The facility shall send a notice to the financial institution with which the account is placed, directing that the financial institution forward all or a portion of the moneys in the obligor's account to the facility. c. The notice to the financial institution shall contain all of the following: (1) The name and social security number of the obligor. (2) A statement that the obligor is believed to have an account at the financial institution. (3) A statement that pursuant to the provisions of this section, the obligor's account is subject to seizure and the financial institution is authorized and required to forward moneys to the facility. (4) The maximum amount that shall be forwarded by the financial institution, which shall not exceed the delinquent or accrued amount of debt being collected by or owed to the state by the obligor. (5) The prescribed time frame which the financial institution must meet in forwarding any amounts. (6) The address of the facility and the account number utilized by the facility for the obligor. (7) The telephone number of the agent for the facility initiating the action. 6. Administrative levy -- notice of initiation of action to obligor and other account holders. a. The facility may administratively initiate an action to seize one or more accounts of an obligor who is subject to this section and section 421.17, subsection 27. b. The facility shall notify an obligor subject to this section. The notice shall contain all of the following: (1) The name and social security number of the obligor. (2) A statement that the obligor is believed to have an account at the financial institution. (3) A statement that pursuant to the provisions of this section, the obligor's account is subject to seizure and the financial institution is authorized and required to forward moneys to the facility. (4) The maximum amount to be forwarded by the financial institution, which shall not exceed the delinquent or accrued amount of debt being collected by or owed to the state by the obligor. (5) The prescribed time frames the financial institution must meet in forwarding any amounts. (6) A statement that any challenge to the action must be in writing and must be received by the facility within ten days of the date of the notice to the obligor. (7) The address of the facility and the account number utilized by the facility for the obligor. (8) The telephone number of the agent for the facility initiating the action. c. The facility shall forward the notice of initiation of action to the obligor by regular mail within two working days of sending the notice to the financial institution pursuant to subsection 5, paragraph "b". d. The facility shall notify any other party known to have an interest in the account. The notice shall contain all of the following: (1) The name of the obligor. (2) The name of the financial institution. (3) A statement that the account in which the other party is known to have an interest is subject to seizure. (4) A statement that any challenge to the action must be in writing and must be received by the facility within ten days of the date of the notice to the party known to have an interest. (5) The address of the facility and the name of the obligor who also has an interest in the account. (6) The telephone number of the agent for the facility initiating the action. e. The facility shall forward the notice to the other party known to have an interest by regular mail within two working days of sending the notice to the financial institution pursuant to subsection 5, paragraph "b". 7. Responsibilities of financial institution. Upon receipt of a notice under subsection 5, paragraph "b", the financial institution shall do all of the following: a. Immediately encumber funds in any account in which the obligor has an interest to the extent of the debt indicated in the notice from the facility. b. No sooner than fifteen days, and no later than twenty days from the date the financial institution receives the notice under subsection 5, paragraph "b", unless notified by the facility of a challenge by the obligor or an account holder of interest, forward the moneys encumbered to the facility with the obligor's name and social security number, the facility's account number for the obligor, and any other information required in the notice. c. The financial institution may assess a fee against the obligor, not to exceed twenty-five dollars, for forwarding of moneys to the facility. This fee is in addition to the amount owed to or being collected by the state by the obligor. If insufficient moneys are available in the debtor's account to cover the fee and the amount in the notice, the institution may deduct the fee amount prior to forwarding moneys to the facility and the amount credited to the obligor's account with the state shall be reduced by the fee amount. 8. Challenges to action. a. Challenges under this section may be initiated only by an obligor or by an account holder of interest. Reviews by the facility under this section are not subject to chapter 17A. b. The person challenging the action shall submit a written challenge to the person identified as the agent for the facility in the notice, within ten days of the date of the notice of initiation of the levy. c. The facility, upon receipt of a written challenge, shall review the facts of the administrative levy with the challenging party within ten days of receipt of the challenge. If the challenging party is not available for the review on the scheduled date, the review shall take place without the challenging party being present. Information in favor of the challenging party shall be considered by the facility in the review. The facility may utilize additional information if such information is available. Only a mistake of fact, including, but not limited to, a mistake in the identity of the obligor or a mistake in the amount owed to or being collected by the state shall be considered as a reason to dismiss or modify the action. d. If the facility determines that a mistake of fact has occurred, the facility shall proceed as follows: (1) If a mistake in identity has occurred or the obligor does not have a delinquent or accrued amount being collected by or owed to the state, the facility shall notify the financial institution that the administrative levy has been released. The facility shall provide a copy of the notice to the obligor by regular mail. (2) If the delinquent or accrued amount being collected by or owed to the state is less than the amount indicated in the notice, the facility shall provide a notice to the financial institution of the revised amount, with a copy of the original notice, and issue a notice to the obligor by regular mail. Upon written receipt of the notice from the facility, the financial institution shall release the funds in excess of the revised amount and forward the revised amount to the facility pursuant to the administrative levy. e. If the facility finds no mistake of fact, the facility shall provide a notice to that effect to the challenging party by regular mail and notify the financial institution to forward the moneys pursuant to the administrative levy. f. The challenging party shall have the right to file an action for wrongful levy in district court within thirty days of the date of the notice in paragraph "e", either in the county where the obligor or the party known to have an interest in the account resides or in Polk county where the facility is located. Actions under this section are in equity and not actions at law. g. Recovery under this section is limited to restitution of the amount that has been wrongfully encumbered or obtained by the department. h. A challenge to an administrative action under this subsection cannot be used to extend or reopen the statute of limitations to protest other departmental actions or to contest the amount or validity of the tax. Only issues involving the levy can be raised in a challenge to an administrative action under this subsection.          Section History: Recent Form 95 Acts, ch 194, §10, 12; 96 Acts, ch 1034, § 34; 96 Acts, ch 1079, § 11; 2003 Acts, ch 145, §286; 2004 Acts, ch 1073, § 5--10; 2007 Acts, ch 174, §93; 2008 Acts, ch 1031, § 113 See also chapter 252I pertaining to collection of child support payments