By: Phelan H.B. No. 3762       A BILL TO BE ENTITLED   AN ACT       relating to the recovery of certain debts owed to this state;   authorizing fees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 321, Government Code, is amended by   adding Subchapter B and to read as follows:   SUBCHAPTER B.  COLLECTION OF DEBT OWED TO STATE          Sec. 321.551.  DEFINITIONS. In this subchapter:                (1)  "Account" includes any demand deposit account,   checking account, negotiable withdrawal order account, savings   account, time deposit account, money market mutual fund, or any   type of mutual fund account, and intangible property.  The term   account does not include amounts held by a financial institution as   collateral for loans extended by the financial institution.                (2)  "Debt" a legal non-tax related obligation to pay   money, including any principal, any interest that has accrued or   will accrue until the debt is paid, any penalties, any costs, and   any other charges permitted by law.  The term debt includes any   non-tax related obligation of any kind referred to the SORC for   collection by the state, government, or any government agency, by   the Judicial System, or by the State higher education system.                (3)  "Debtor" means a person who is indebted to the   state, government, or any government agency for any delinquent   accounts, charges, fees, loans, taxes, or other indebtedness due,   or any obligation being collected by the SORC.                (4)  "Employee" means any person or entity that   performs services for another and includes a debtor acting as a   contractor, subcontractor, distributor, agent, or in any   representative capacity in which the debtor receives any form of   consideration.                (5)  "Employer" means any person or entity that pays an   employee to do a specific task or tasks.                (6)  "Financial institution" any financial institution   and any other depository institution, credit union, benefit   association, insurance company, safe deposit company, bond fund,   money market mutual fund, and any mutual fund of any kind or   character.                (7)  "Final debt" a debt that is no longer subject to an   appeal.                (8)  "Final notification" the notification provided by   section 12 of this Act.                (9)  "Referring entity" the entity referring the debt   to the SORC for collection.                (10)  "State Obligation Recovery Center (SORC)" is not   a state agency and means a benefits funded contractor procured as a   third-party to recover debts owed to the state.                (11)  "Wage" means any form of compensation due a   debtor and includes wages, salary, bonus, commission, or other   payment directly or indirectly related to consideration for the   performance of a service.          Sec. 321.552.  DUTIES. The SORC shall work to collect every   debt referred to the SORC.  Exceptions to the use of the SORC are   permissible if the debt includes HIPPA data.  The SORC is not a debt   collection agency.  The character of the debt in the hands of the   referring entity does not change by the referral of the debt to the   SORC for collection.          Sec. 321.553.  ANNUAL ASSESSMENT OF OUTSTANDING DEBT.  The   third-party vendor selected by the state auditor to operate the   SORC shall preform an annual assessment of all outstanding debt   eligible for referral to the SORC.          Sec. 321.554.  GENERAL POWERS. The SORC shall have the   ability to use the referring entity's statutory collection   authority to recover the obligations owed to the referring entity.     The SORC shall also have the authority to:                (1)  Sue;                (2)  File liens;                (3)  Enter into payment agreements with debtors;                (4)  Impose a cost recovery charge;                (5)  Collect data for obligation recovery purposes;                (6)  Establish and maintain a centralized electronic   obligation registry;                (7)  Exercise the settlement authority granted to it by   the referring entity;                (8)  Provide information to the motor vehicle division   of the Department of Revenue regarding the non-renewal of   registrations for motor vehicles, motorcycles, boats or other   conveyances;                (9)  Provide information to any unit of the state   regarding the non-renewal of professional licenses;                (10)  Provide information to the Department   responsible for hunting licenses and fishing licenses regarding the   non-issuance of hunting and fishing licenses;                (11)  Impose an administrative wage assignment   process;                (12)  Establish and maintain a financial institution   data match system;                (13)  Impose an administrative bank levy process;                (14)  Set-off against any monies to be paid by the state   to a debtor for any obligation owed by the debtor;                (15)  Contract with collection agencies for the   recovery of an obligation on behalf of the SORC;                (16)  Utilize any other obligation recovery methods   authorized by state law; and                (17)  All other authority granted to the SORC by this   Act.          (b)  The SORC may determine which method or combination is   most suitable to recover the obligation.          (c)  A state debtor may be prohibited from renewing,   obtaining or maintaining the following licenses or registrations   unless the obligation and cost recovery charge is either paid in   full or the debtor has entered into a payment plan with the SORC and   the payment plan is current:                (1)  Any registration for any motor vehicle,   motorcycle, boat, or other conveyances;                (2)  Any professional license; and                (3)  Any hunting license or any fishing license.          Sec. 321.555  COLLECTION CHARGE.  (a)  To fund its   operations, the SORC will collect a cost recovery charge, which   shall be 20 percent of the principal amount of the obligation.  All   methods available to recover any obligation referred to the SORC   are available to the SORC for the collection of the cost recovery   charge.  The SORC shall retain the cost recovery fee and transfer   any monies collected from a debtor to the referring entity within   thirty days after the end of the month in which the monies were   collected.  If the amount recovered is less than the obligation and   the cost recovery charge, the amount recovered shall be prorated   between the referred obligation and the cost recovery charge.          (b)  Prior to transferring any obligation to the SORC, the   referring entity shall send a final notification to the debtor that   the obligation will be referred to the SORC and a 20 percent cost   recovery charge will be added.  Challenges to any obligation   recovery by the SORC may be initiated only in writing and by the   debtor.          (c)  Any executive branch agency shall use the SORC to   collect any executive branch agency debt.          (d)  The Judicial System may use the SORC to collect any   costs, fines, fees, or restitution ordered in any adult criminal   proceeding.          (e)  The state higher education system may use the SORC to   collect any debt owed within the state higher education system.          (f)  All local governments, including municipalities,   counties, and townships, may use the SORC to collect any debt owed   them.          Sec. 321.556.  INFORMATION FOR COLLECTION.  (a)  The SORC   shall keep any information regarding any obligation referred to the   SORC confidential.  Notwithstanding any law to the contrary,   referring entities are authorized to transmit data to the SORC   deemed necessary by the SORC to aid in the obligation recovery.          (b)  Information a referring entity provides to the SORC may   be used only for the purpose of collecting a referred debt.          Sec. 321.557.  REMITTANCE AND DEPOSIT OF COLLECTED AMOUNTS.   (a)  Except as provided by Sec. 321.554 a contracted third-party   vendor shall remit to the referring entity all amounts the   collector collects on debts transferred to the SORC.          (b)  The referring entity shall deposit the remitted amounts   to the credit of the same funds or accounts to which the money would   have been deposited if collected by the referring entity.          (c)  If more than one debt owed by the debtor is transferred   to the SORC, amounts recovered from the debtor and allocated to each   referred debt in the order in which the debts were referred to the   SORC or, if the debts were referred concurrently, are allocated   proportionally to each debt.          (d)  Any payment of any kind to be made to a debtor by the   state, when the debtor has an obligation that is referred to the   SORC, is subject to offset by the SORC unless the obligation and   cost recovery charge is either paid in full or the debtor has   entered into a payment plan with SORC and the payment plan is   current.          (e)  Notwithstanding other statutory provisions which   provide for execution, attachment, garnishment, or levy against   accounts, the SORC may use an administrative wage assignment or   administrative bank levy process to collect the debt referred to   the SORC.          (f)  If the SORC is unable to recover the referred   obligation, the SORC, with the approval of the referring entity,   may forward the obligation to a collection agency, which is   permitted to add a collection charge.          Sec. 321.558.  ANNUAL REPORT. Not later than October 1 of   each year, the state auditor shall provide a written report to the   legislature concerning the collection of referred debts under this   subchapter during the preceding state fiscal year.          Sec. 321.559.  RULES. The state auditor shall have the   ability to promulgate rules for operation of the SORC and shall   implement this subchapter by December 31, 2017.  The SORC shall   maintain the necessary data to provide statistical measurements of   the operation of the SORC as provided in this Act.          SECTION 2.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2017.