Clarify Powers of State Auditor.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025

SESSION LAW 2025-83
HOUSE BILL 549

*H549-v-7*
AN ACT TO CLARIFY TH E POWERS OF THE STAT E AUDITOR, TO MAKE O THER
CHANGES RELATED TO T HE STATE AUDITOR, AN D TO ALLOW THE
DEPARTMENT OF REVENU E TO FORCE COLLECT D EBTS OWED TO STATE
AGENCIES THROUGH LEV Y AND SALE AND ATTAC HMENT AND
GARNISHMENT.

The General Assembly of North Carolina enacts:

PART I. CLARIFY POWERS OF STATE AUDITOR
SECTION 1. G.S. 143-64.24 reads as rewritten:
"§ 143-64.24. Applicability of Article.
This Article shall does not apply to the following agencies:
…
(10) The Office of the State Auditor."
SECTION 2. G.S. 143B-1320(b) reads as rewritten:
"(b) Exemptions. – Except as otherwise specifically provided by law, the provisions of
this Chapter do this Article does not apply to the following entities: the General Assembly, the
Judicial Dep artment, and The University of North Carolina and its constituent institutions.
institutions, and the Office of the State Auditor. These entities may elect to participate in the
information technology programs, services, or contracts offered by the Department, including
information technology procurement, in accordance with the statutes, policies, and rules of the
Department. The election must be made in writing, as follows:
(1) For the General Assembly, by the Legislative Services Commission.
(2) For the Judicial Department, by the Chief Justice.
(3) For The University of North Carolina, by the Board of Governors.
(4) For the constituent institutions of The University of North Carolina, by the
respective boards of trustees.
(5) For the Office of the State Auditor, by the State Auditor."
SECTION 3. G.S. 143B-1350 reads as rewritten:
"§ 143B-1350. Procurement of information technology.
(a) The State CIO is responsible for establishing policies and procedures for information
technology procurement for State agencies.
Notwithstanding Except as otherwise provided by su bsection ( l) of this section,
notwithstanding any other provision of law, the Department shall procure all information
technology goods and services for participating agencies and shall approve information
technology procurements for separate agencies. The State CIO may cancel or suspend any agency
information technology procurement that occurs without State CIO approval.
…
(l) The Office of the State Auditor is exempt from this Part and may procure information
technology services pursuant to G.S. 147-64.7(b)(1)."
SECTION 4. G.S. 147-64.4 reads as rewritten:
"§ 147-64.4. Definitions.

Page 2 Session Law 2025-83 House Bill 549
The following definitions apply in this Article:
…
(5) Publicly funded entity. – Any individual, private corporation, institution,
association, board, or other organization that receives, disburses, or otherwise
handles State or federal funds."
SECTION 5. G.S. 147-64.6B(b) reads as rewritten:
"(b) The Auditor shall investigate reports of allegations of impro per governmental
activities of State agencies and State employees agencies, employees of those agencies, and
publicly funded entities within the scope of authority set forth in G.S. 147-64.6, including
misappropriation, mismanagement, or waste of State res ources, fraud, violations of State or
federal law, rule or regulation by State agencies or State employees administering State or federal
programs, and substantial and specific danger to the public health and safety. When the allegation
involves issues of substantial and specific danger to the public health and safety, the Auditor
shall notify the appropriate State agency immediately. When the Auditor believes that an
allegation of improper governmental activity is outside the authority set forth in G.S. 147-64.6,
the Auditor shall refer the allegation to the appropriate State agency responsible for the
enforcement or administration of the matter for investigation. When the Auditor believes that an
allegation of improper governmental activity involves matter s set forth in subdivisions (1), (2),
or (3) of this subsection, those matters shall be referred as follows:
(1) Allegations of criminal misconduct to either the State Bureau of Investigation
or the District Attorney for the county where the alleged misconduct occurred.
(2) Allegations of violations of Chapter 138A, Chapter 120C and Article 14 of
Chapter 120 of the General Statutes to the State Ethics Commission.
(3) Allegations of violations of Chapter 163 of the General Statutes to the State
Board of Elections."
SECTION 6. G.S. 147-64.7 reads as rewritten:
"§ 147-64.7. Authority.
(a) Access to Persons and Records. –
(1) The Auditor and the Auditor's authorized representatives shall have ready
access to persons and may examine and copy all books, records, reports,
vouchers, correspondence, files, personnel files, investments, and any other
documentation of any State agency. Upon demand of the Auditor, access shall
extend to databases, datasets, and digital records necessary for any purpose
within the authority of the Auditor, including performing audits of any type,
assessing government efficiency, risk assessment, fraud detection, audit
planning, and evidence gathering. The review of State tax returns shall be
limited to matters of official business and the Auditor's report shall not violate
the confidentiality provisions of tax laws. Notwithstanding confidentiality
provisions of tax laws, the Auditor may use and disclose information related
to overdue tax debts in support of the Auditor's statutory mission.
(2) The For audits or investiga tions conducted under G.S. 147-64.6(c)(25), the
Auditor and the Auditor's duly authorized representatives shall have such
access to persons, records, papers, reports, vouchers, correspondence, books,
databases, datasets, digital records, and any other documentation which that
is in the possession of any individual, private corporation, institution,
association, board, or other organization publicly funded entity which pertain
to:to either of the following:
a. Amounts received pursuant to a grant or contract from the federal
government, the State, or its political subdivisions.
b. Amounts received, disbursed, or otherwise handled on behalf of the
federal government or the State. government, the State, or its political

House Bill 549 Session Law 2025-83 Page 3
subdivisions. In order to determine that payments to providers of social
and medical services are legal and proper, the providers of such these
services will shall give the Auditor, or the Auditor's authorized
representatives, access to the records of recipients who that receive
such these services.
(3) The Auditor shall, for the purpose of examination and audit authorized by this
act, have the authority, and will be provided ready access, to examine and
inspect all property, equipment, and facilities in the possession of any State
agency or any individual, private corporation, institution, association, board,
or other organization publicly funded entity which were fu rnished or
otherwise provided through grant, contract, or any other type of funding by
the State of North Carolina, or the federal government. Audits and
investigations of publicly funded entities are limited as provided in
G.S. 147-64.6(c)(25).
(4) All contracts or grants entered into by State agencies or political subdivisions
shall include, as a necessary part, a clause providing access as intended by this
section.
(5) The Auditor and his the Auditor 's authorized agents are authorized to
representatives may examine all books and accounts of any individual, firm,
or corporation only insofar as they relate to transactions with any agency of
the State.
(a1) Hearing. – If a person fails or refuses to provide to the Auditor or the Auditor 's
authorized representatives the access described in subsection (a) of this section, the Auditor may
commence an action in superior court for a show cause hearing. The person shall appear at the
hearing and show cause why the person failed or refused to comply with subsectio n (a) of this
section. The court may issue an injunction to the person to comply with subsection (a) of this
section.
…."

PART II. OTHER STATE AUDITOR AMENDMENTS
SECTION 7. G.S. 143B-168.12(b) is repealed.
SECTION 8. Section 62(b) of S.L. 2014-115 is repealed.
SECTION 9. G.S. 143B-1410 is repealed.
SECTION 10. G.S. 147-64.6(c) reads as rewritten:
"(c) Responsibilities. – The Auditor is responsible for the following acts and activities:
…
(21) If an audit or investigation undertaken by the Auditor results in a finding that
a private person or entity has received public funds as a result of fraud,
misrepresentation, or other deceptive acts or practices while doing business
with a State agency, th e Auditor shall submit a detailed written report of the
finding, and any additional necessary supporting documentation, to (i) the
Department of Revenue in accordance with G.S. 105A-6A(a) and (ii) the State
Purchasing Officer or the appropriate official, a s applicable. A report
submitted under this subsection may include a recommendation that the
private person or entity be debarred from doing business with the State or a
State agency.
…
(24) The Auditor may engage in an audit or investigation of any public ly funded
entity. Any such audit or investigation conducted shall be limited to the State
or federal funds received, disbursed, or otherwise handled by the publicly
funded entity."

Page 4 Session Law 2025-83 House Bill 549

PART III. DEPARTMENT OF REVENUE AUTHORIZATION TO FORCE COLLE CT
DEBTS
SECTION 11.(a) Chapter 105A of the General Statutes reads as rewritten:
"Chapter 105A.
"Setoff Debt Collection and Forced Debt Collection Act.
"Article 1.
"In General.
"§ 105A-1. Purposes.
The purpose of this Chapter is to establish as policy that all cl aimant agencies agencies, the
Office of the State Auditor, and the Department of Revenue shall cooperate in identifying debtors
who owe money to the State or to a local government through their various agencies and who
qualify for refunds from the Department of Revenue. agencies. It is also the intent of this Chapter
that procedures be established for (i) setting off against any a debtor's tax refund the sum of any
debt owed to the State or to a local government. government and (ii) force collecting debts owed
to State agencies. Furthermore, it is the legislative intent that this Chapter be liberally construed
so as to effectuate these purposes as far as legally and practically possible.
"§ 105A-2. Definitions.
The following definitions apply in this Chapter:
…
(5) Forced collection. – The debt collection remedies provided by G.S. 105A-6B
and G.S. 105A-6C.
…
(7) Net proceeds collected. – Gross For setoff collection actions, "net proceeds
collected" means gross proceeds collected through setoff against a debtor's
refund minus the collection assistance fees provided in
G.S. 105A-13.G.S. 105A-13(a) or ( c), as appropriate . For forced collection
actions, "net proceeds collected " means gross proceeds collected through
forced collection minus the forced collection assistance fee provided in
G.S. 105A-13(a1).
…
"§ 105A-3. Remedy Remedies additional; mandatory State usage; optional local usage;
usage of setoff collection only; obtaining identifying information; registration.
(a) Remedy Remedies Additional. – The collection remedy remedies under this Chapter
is are in addition to and not in substitution for any other remedy available by law.
…
(b1) Optional Local Usage. Usage of Setoff Collection Only. – A local agency may submit
a debt owed to it for setoff collection under this Chapter. A local agency may not submit a debt
owed to it for forced collection under this Chapter. A local agency that decides to submit a setoff
debt owed to it for collection under this Chapter must establish the debt by following the
procedure set in G.S. 105A-5 and must submit the debt through one of the following:
…
(d) Registration and Reports. – A State agency must register with the Department and
with the State Controller . Every State agency must report annually to the State Controller the
amount of setoff debts owed to the agency for which the agency did not submit a claim for setoff
and the reason for not submitting the claim.
"§ 105A -4. Minimum debt and refund.refund f or setoff collection ; minimum debt for
forced collection.
This Chapter applies only to (i) a setoff collection debt that is at least fifty dollars ($50.00)
and to a refund that is at least this same amount.amount and (ii) a forced collection debt for which

House Bill 549 Session Law 2025-83 Page 5
the Department determines the cost to the State in collecting the debt is less than the amount of
the debt collectible.
"§ 105A-5. Local agency notice, hearing, and decision.
(a) Prerequisite. – A local agency may not submit a debt for setoff collection under this
Chapter until it has given the notice required by this section and the claim has been finally
determined as provided in this section.
…
(e) Return of Amount Set Off. – If a local agency submits a debt for setoff collection
under this Chapter wit hout sending the notice required by subsection (b) of this section, the
agency must send the taxpayer the entire amount set off plus the collection assistance fees
provided in G.S. 105A-13. Similarly, if a local agency submits a debt for setoff collection under
this Chapter after sending the required notice but before final determination of the debt and a
decision finds that the local agency is not entitled to any part of the amount set off, the agency
must send the taxpayer the entire amount set off plus t he collection assistance fees provided in
G.S. 105A-13. That portion of the amount returned that reflects the collection assistance fees
must be paid from the local agency's funds.
If a local agency submits a debt for setoff collection under this Chapter a fter sending the
required notice and the net proceeds collected that are credited to the local agency for the debt
exceed the amount of the debt, the local agency must send the balance to the debtor. No part of
the collection assistance fees provided in G.S. 105A-13 may be returned when a notice was sent
and a debt is owed but the debt is less than the amount set off.
…
"§ 105A-6A. Procedure for force collecting; debts eligible for force collection.
(a) State Auditor Notice of Final Determination to Department Required. – Upon final
determination of a debt under G.S. 105A-8A, the Office of the State Auditor shall notify the
Department in writing of the debt and shall supply any information necessary to identify the
debtor against whom forced collection may be sought, including the written report and any
additional supporting documentation required to be submitted by the Auditor under
G.S. 147-64.6(c)(21).
(b) Department Notice to Debtor Required. – Upon receipt of notification by the Office
of the State Auditor under subsection (a) of this section , and prior to implementing any forced
collection remedy, the Department shall provide written notice to the debtor of the following:
(1) The Department's intention to collect the debt and the forced debt collection
remedies allowed by this Chapter.
(2) The ability of the debtor to pay the debt in full or to enter into an installment
agreement to pay the debt pursuant to G.S. 105A-6D.
(3) That a collection assistance fee equal to three percent (3%) of the amount of
the debt collected will be added to the debt if it is forced collected.
(c) Debts Eligible for Forced Collection. – Only those debts that are discovered through
an audit or investigation undertaken by the Office of the State Auditor in accordance with
G.S. 147-64.6(c)(21) are eligible for forced collection under this Chapter.
"§ 105A-6B. Levy and sale.
Notwithstanding that a debt owed to a State agency is not a collectible tax under
G.S. 105-241.22, if a debtor does not pay a debt, or enter into an installment agreement to pay a
debt, within 60 days of being notified by the Department in accordance with G.S. 105A-6A(b),
the Department may force collect the debt by levy and sale in the manner prescribed by
G.S. 105-242(a)(1) and (a)(2) for the levy and sale of property for the nonpayment of tax.
"§ 105A-6C. Attachment and garnishment.
Notwithstanding that a debt owed to a State agency is not a collectible tax under
G.S. 105-241.22, if a debtor does not pay a debt, or enter into an installment agreement to pay a
debt, within 60 days of being notified by the Department in accordance with G.S. 105A-6A(b),

Page 6 Session Law 2025-83 House Bill 549
the Department may force collect the debt by attachment and garnishment in the manner
prescribed by G.S. 105-242.1 for the attachment and garnishment of intangible personal property
for the nonpayment of tax.
"§ 105A-6D. Installment agreements.
The Secretary may enter into an agreement with the debtor for payment of the debt in
installments if the Secretary determines that the agreement will facilitate collection of the debt.
The Secretary may modify or terminate the agreement if one or more of the following findings
is made:
(1) Information provided by the debtor in support of the agreement was inaccurate
or incomplete.
(2) Collection of debt to which the agreement applies is in jeopardy.
(3) The debtor's financial condition has changed.
(4) The debtor has failed to pay an installment when due.
(5) The debtor has failed to provide information requested by the Secretary.
The Secretary must give a debtor who has entered into an installment agreement at least 30
days' written notice before modifying or terminating the agreement on the grounds that the
debtor's financial condition has changed unless the debtor fai led to disclose or concealed assets
or income when the agreement was made or the debtor has acquired assets since the agreement
was made that can satisfy all or part of the debt. A notice must specify the basis for the Secretary's
finding of a change in the debtor's financial condition.
…
"§ 105A -8. Setoff collection; State agency notice, hearing, decision, and refund of
setoff.setoff collection.
…
"§ 105A-8A. Forced collection; prerequisite, State Auditor notice, State Auditor hearing,
decision.
(a) Prerequisite. – The Office of the State Auditor may not submit notice of final
determination of a debt to the Department for forced collection under G.S. 105A-6A(a) until the
Auditor has finally determined the debt in accordance with this section . For purposes of this
section, a "finally determined " debt shall mean a debt that (i) meets the requirements of
G.S. 105A-6A(c), (ii) for which the Auditor has given notice as required by subsection (b) of this
section, and (iii) for which the debtor did not file a timely request for hearing under this section,
or, for which the debtor did file a timely request for hearing but a decision made after hearing
determined that a debtor owed a debt, in a sum certain, to a State agency, and all appellate relief
afforded the debtor for purposes of fina lly determining the debt under this section has been
exhausted.
(b) Notice. – The Office of the State Auditor must send written notice to a debtor that the
Auditor intends to submit the debt owed by the debtor to the Department for forced collection.
At a minimum, the notice must explain (i) the basis for the State's claim to the debt, (ii) the forced
debt collection remedies allowed by this Chapter, (iii) that a collection assistance fee equal to
three percent (3%) of the debt will be added to the debt if it is force collected, and (iv) that the
debtor has the right to contest the matter by filing a request for hearing with the Auditor, stating
the time limits and procedure for requesting the hearing , and by stating that failure to request a
hearing within the required time may result in forced collection of the debt.
(c) Auditor Hearing. – A hearing on a contested claim of the State Auditor under this
section must be conducted in accordance with Article 3 of Chapter 150B of the General Statutes.
A request for a hearing must be filed within 30 days after the Auditor mails the debtor notice of
the proposed forced collection . A request for a hearing is considered to be filed when it is
delivered for mailing with postage prepaid and properly addressed. In a hearing under this
section, an issue that has previously been litigated in a court proceeding cannot be considered. A
final decision on a hearing under this section may be appealed in accordance with G.S. 105A-9.

House Bill 549 Session Law 2025-83 Page 7
(d) Decision. – A decision made after a hearing under this section must determine , at a
minimum, (i) whether a debt is owed to the State agency, (ii) by whom the debt is owed, and (iii)
the amount of the debt.
"§ 105A-9. Appeals from hearings.
Appeals from hearings allowed under this Chapter, other than those conducted by the Judicial
Branch and the Division of Employment Security, shall be in accordance with the provisions of
Chapter 150B of the General Statutes, the Administrative Procedure Act, except that the place of
initial judicial review shall be the superior court for the county in which the debtor resides.
resides, or, in the case of nonresident debtors , the superior court of Wake County. A party
aggrieved by an order or decision of a h earing conducted by the clerk of superior court or the
Director of the North Carolina Administrative Office of the Courts or the Director's designee,
under this Article may, within 10 days of entry of the order, appeal to the superior court for a
hearing de novo. Notice of appeal shall be in writing and shall be filed with the clerk of superior
court in the county where the order was entered. Appeals from hearings allowed under this
Chapter that are conducted by the Division of Employment Security shall be in accordance with
the provisions of Chapter 96 of the General Statutes.
…
"§ 105A-13. Collection assistance fees.
(a) State Setoff. Setoff Collection. – To recover the costs incurred by the Department in
collecting setoff debts under this Chapter, a collection assistance fee of five dollars ($5.00) is
imposed on each debt collected through setoff. The Department must collect this fee as part of
the debt and retain it. The collection assistance fee under this subsection shall not be added to
child support debts or collected as part of child support debts. Instead, the Department shall retain
from collections under Division II of Article 4 of Chapter 105 of the General Statutes the cost of
collecting child support debts through debt setoff under this Chapter.
(a1) State Forced Collection. – To recover the costs incurred by the Department in force
collecting debts under this Chapter, a collection assistance fee equal to three percent (3%) of the
amount of the debt is imposed on each debt collected through forced collection. The Department
must collect this fee as part of the debt and retain it. The collection assistance fee under this
subsection shall not be added to child support debts or collected as part of child support debts .
Instead, the Department shall retain from collections under Article 4 of Chapter 105 of the
General Statutes the cost of collecting child support debts through forced collection under this
Chapter.
…
(c) Local Debts. – To recover the costs incurred by local agencies in submitting debts for
setoff collection under this Chapter, a local collection assistance fee of fifteen dollars ($15.00) is
imposed on each local agency debt submitted under G.S. 105A-3(b1) and collected through
setoff. The Department must collect this fee as part of the debt and remit it to the clearinghouse
that submitted the debt. The local collection assistance fee does not apply to child support debts.
…
"§ 105A-14. Accounting Setoff collection; accounting to the claimant agency; agency, credit
to debtor's obligation.
(a) Setoff Collection ; Accounting to Claimant Agency. – Simultaneously with the
transmittal of the net proceeds collected through setoff collection to a claimant agency, the
Department must provide the agency with an accounting of the setoffs for which payment is
being made. The accounting must whenever possible include the full names of the debtors, the
debtors' social security numbers or federal identification numbers, the gross proceeds collected
per setoff, the net proceeds collected per setoff, and the collection assistance fee added to the
debt and collected per setoff.
(b) Setoff Collection; Credit to Debtor's Obligation. – Upon receipt by a claimant agency
of net proceeds collected on the claimant agency's behal f by the Department, a final

Page 8 Session Law 2025-83 House Bill 549
determination of the claim if it is a State agency claim, and an accounting of the proceeds as
specified under this section, the claimant agency must credit the debtor's obligation with the net
proceeds collected.
"§ 105A-14A. Forced collection proceeds credited to General Fund.
The net proceeds collected through a forced collection conducted under this Chapter shall be
credited to the General Fund by the Department within 60 days of collection.
…."
SECTION 11.(b) This section becomes effective December 1, 2025, and applies to
the collection of debts on or after that date.
SECTION 12.(a) G.S. 143B-218 reads as rewritten:
"§ 143B-218. Department of Revenue – duties.
It shall be the duty of the Department to collect and account for the State's tax funds, to insure
uniformity of administration of the tax laws and regulations, to conduct research on revenue
matters, and to exercise general and specific supervision over t he valuation and taxation of
property throughout the State.State, and to perform other non-tax related functions as enacted by
the General Assembly."
SECTION 12.(b) This section becomes effective December 1, 2025, and applies to
the performance of non-tax related functions by the Department on or after that date.

PART IV. EFFECTIVE DATE
SECTION 13. Sections 1, 2, and 3 of this act become effective July 1, 2025, and
apply to contracts entered into or renewed on or after that date. G.S. 147-64.6(c)(21), as amended
by Section 10 of this act, becomes effective December 1, 2025. Unless otherwise provided, the
remainder of this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 25th day of June, 2025.

s/ Rachel Hunt
President of the Senate

s/ Destin Hall
Speaker of the House of Representatives

VETO Josh Stein
Governor

Became law notwithstanding the objections of the Governor at 11:24 a.m. this 29 th
day of July, 2025.

s/ Ms. Sarah Holland
Senate Principal Clerk