Debt Setoff Program off to a great start in 2006

Also see:
Debt Setoff Program resource page

The Debt Setoff Clearinghouse is ready for the new tax year, and if early returns are any indication, 2006 promises to be the biggest year yet for the program.

The clearinghouse received its first batch of refunds from the North Carolina Department of Revenue (DoR) in early February and successfully matched more than $750,000 for participating governments and entities. In mid-February, the clearinghouse received its second file from the DoR, and established a record by returning more than $3.9 million.

The $4.6 million generated by the first two matches is already more than half of the $8.5 million that was returned to local governments and approved entities in all of 2005, according to NCACC Project Manager John Whitehurst.

Local governments and approved entities have already submitted nearly $100 million of debts for more than 281,000 debtors to DoR for the upcoming tax season. Prior to this year, the clearinghouse had returned nearly $16 million in debts since the program began in 2002.

With 44 new participating entities for 2006 – 16 counties, 21 municipalities, two joint regional authorities, one public health authority, two sanitary districts and two water and sewer districts – the clearinghouse is expecting even further growth in the amount of debts returned to local governments.

The Debt Setoff Clearinghouse is sponsored by the NCACC and the North Carolina League of Municipalities. The clearinghouse allows local governments to submit any outstanding delinquent debt (totaling $50 or more) through the clearinghouse to DoR to attempt to offset delinquent debts against individual income tax refunds.

In addition to cities and counties, water and sewer authorities (created under N.C. General Statute § 162A, Article 1) and interlocal authorities (created under N.C.G.S. § 160A, Article 20) were authorized in 2004 to participate in the Debt Setoff Clearinghouse. Last year, the General Assembly added public health authorities (created under N.C.G.S. § 130A, Article 2); metropolitan sewerage districts (created under N.C.G.S § 162A, Article 5) and sanitary districts (created under N.C.G.S. § 130A, Article 2).

The NCACC and NCLM contract with Five Star Computing, Inc., of Columbia, S.C., to administer the program.

It is still not too late to participate in 2006, according to Whitehurst. Counties and entities interested in participating should visit the debt setoff Web site at www.ncsetoff.org to fill out the 2006 participation form, which can be done online. Because the busiest part of the year is winter and spring, when taxpayers are filing their returns for 2005, Whitehurst said counties should sign up as soon as possible.