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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
2nd Session of the 60th Legislature (2026)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 3319 By: Eaves of the House
and
Woods of the Senate
COMMITTEE SUBSTITUTE
An Act relating to revenue and taxation; amending 68
O.S. 2021, Section 205.2, as amended by Section 1,
Chapter 277, O.S.L. 2024 (68 O.S. Supp. 2025, Section
205.2), which relates to claims by state agencies,
municipal courts, district courts, or public housing
authorities against state income tax refunds;
modifying definition of qualified entity to include
municipal public authorities and public trusts;
allowing for municipal public authorities to file a
claim for collection of delinquent utility charges;
prohibiting municipal public authorities from filing
a claim for collection of medical debt; and providing
an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 205.2, as
amended by Section 1, Chapter 277, O.S.L. 2024 (68 O.S. Supp. 2025,
Section 205.2), is amended to read as follows:
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Section 205.2. A. For purposes of this section, a "qualified
entity" shall mean a:
1. State agency;
2. Municipal court;
3. District court;
4. Public housing authority operating pursuant to Section 1062
of Title 63 of the Oklahoma Statutes;
5. District attorney seeking to collect unpaid court-ordered
monetary obligations; or
6. Any municipal public authority or public trust created
pursuant to Section 176 of Title 60 of the Oklahoma Statutes or
other applicable law, the beneficiary of which is a municipality of
this state; or
7. The designee of an entity described in paragraphs 1 through
5 6 of this subsection.
B. A qualified entity seeking to collect a debt, unpaid
municipal or district court fines and costs or final judgment of at
least Fifty Dollars ($50.00) from an individual who has filed a
state income tax return may file a claim with the Oklahoma Tax
Commission requesting that the amount owed to the qualified entity
be deducted from any state income tax refund due to that individual.
In addition to any debt authorized for collection pursuant to this
section, a qualified entity that is a municipal public authority or
public trust may file a claim with the Oklahoma Tax Commission
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requesting that the amount owed to the qualified entity for
delinquent utility charges, including, but not limited to, water
sewer, sanitation, and related service fees be deducted from any
state income tax refund due to that individual, provided that the
utility charges are at least ninety (90) days delinquent and the
utility service associated with the delinquent account has been
lawfully disconnected for nonpayment. A qualified entity that is a
municipal public authority or public trust shall not file a claim
pursuant to this section for any amount owed to the municipal public
authority or public trust for medical services or medical treatment
received by an individual. The claim shall be filed electronically
in a form prescribed by the Tax Commission and shall contain
information necessary to identify the person owing the debt,
including the full name and Social Security number of the debtor.
1. Upon receiving a claim from a qualified entity, the Tax
Commission shall deduct the claim amount, plus collection expenses
as provided in this section, from the tax refund due to the debtor
and transfer the amount to the qualified entity. Provided, the Tax
Commission need not report available funds of less than Fifty
Dollars ($50.00).
2. The qualified entity shall send notice to the debtor by
regular mail at the last-known address of the debtor as shown by the
records of the Tax Commission when seeking to collect a debt not
reduced to final judgment. The qualified entity shall send notice
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to the judgment debtor or defendant by first-class mail at the last-
known address of the judgment debtor or defendant as shown by the
records of the Tax Commission when seeking to collect a final
judgment or unpaid court fines and costs. The Tax Commission shall
provide in an agreed electronic format to the Department of Human
Services the amount withheld by the Tax Commission, the home address
and the Social Security number of the taxpayer. The notice shall
state:
a. that a claim has been filed with the Tax Commission
for any portion of the tax refund due to the debtor or
defendant which would satisfy the debt, unpaid court
fines and costs, or final judgment in full or in part,
b. the basis for the claim,
c. that the Tax Commission has deducted an amount from
the refund and remitted it to such qualified entity,
d. that the debtor or defendant has the right to contest
the claim by sending a written request to the
qualified entity for a hearing to protest the claim,
and if the debtor or defendant fails to apply for a
hearing within sixty (60) days after the date of the
mailing of the notice, the debtor or defendant shall
be deemed to have waived his or her opportunity to
contest the claim. Provided, if the claim was filed
by the Department of Human Services, the notice shall
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state that the debtor must contest the claim by
sending a written request to the Department within
thirty (30) days after the date of the mailing of the
notice, and
e. that a collection expense of five percent (5%) of the
gross proceeds owed to the qualified entity has been
charged to the debtor or defendant and withheld from
the refund.
3. If the qualified entity determines that a refund is due to
the taxpayer, the qualified entity shall reimburse the amount
claimed plus the five-percent collection expense to the taxpayer.
The qualified entity may request reimbursement of the two-percent
collection expense retained by the Tax Commission. Such request
must be made within ninety (90) days of reimbursement to the
taxpayer. If timely requested, the Tax Commission shall make such
reimbursement to the qualified entity within ninety (90) days of the
request.
4. In the case of a joint return, the notice shall state:
a. the name of any taxpayer named in the return against
whom no debt, no unpaid court fines and costs, or
final judgment is claimed,
b. the fact that a debt, unpaid court fines and costs, or
final judgment is not claimed against the taxpayer,
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c. the fact that the taxpayer is entitled to receive a
refund if it is due regardless of the debt, court
fines and costs, or final judgment asserted against
the debtor or defendant,
d. that in order to obtain the refund due, the taxpayer
must apply, in writing, for a hearing with the
qualified entity named in the notice within sixty (60)
days after the date of the mailing of the notice.
Provided, if the claim was filed by the Department of
Human Services, the notice shall state that the
taxpayer must apply, in writing, for a hearing with
the Department within thirty (30) days after the date
of the mailing of the notice, and
e. if the taxpayer against whom no debt, no unpaid court
fines and costs, or final judgment is claimed fails to
apply in writing for a hearing within sixty (60) days
after the mailing of the notice, the taxpayer shall
have waived his or her right to a refund. Provided,
if the claim was filed by the Department of Human
Services, the notice shall state that if the taxpayer
fails to apply in writing for a hearing with the
Department within thirty (30) days after the date of
the mailing of the notice, the taxpayer shall have
waived his or her right to a refund.
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C. If the qualified entity asserting the claim receives a
written request for a hearing from the debtor or taxpayer against
whom no debt, no court fines and costs, or final judgment is
claimed, the qualified entity shall grant a hearing according to the
provisions of the Administrative Procedures Act. It shall be
determined at the hearing whether the claimed sum is correct or
whether an adjustment to the claim shall be made. Pending final
determination at the hearing of the validity of the debt, unpaid
court fines and costs, or final judgment asserted by the qualified
entity, no action shall be taken in furtherance of the collection of
the debt, unpaid court fines and costs, or final judgment. Appeals
from actions taken at the hearing shall be in accordance with the
provisions of the Administrative Procedures Act.
D. Upon final determination at a hearing, as provided for in
subsection C of this section, of the amount of the debt, unpaid
court fines and costs, or final judgment, or upon failure of the
debtor or taxpayer against whom no debt, no unpaid court fines and
costs, or final judgment is claimed to request such a hearing, the
qualified entity shall apply the amount of the claim to the debt
owed. Any amounts held by the qualified entity in excess of the
final determination of the debt and collection expense shall be
refunded by the qualified entity to the taxpayer. However, if the
tax refund due is inadequate to pay the collection expense and debt,
unpaid court fines and costs, or final judgment, the balance due the
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qualified entity shall be a continuing debt or final judgment until
paid in full.
E. Upon receipt of a claim as provided in subsection A of this
section, the Tax Commission shall:
1. Deduct from the refund five percent (5%) of the gross
proceeds owed to the qualified entity, and distribute it by
retaining two percent (2%) and transferring three percent (3%) to
the qualified entity, as an expense of collection. The two percent
(2%) retained by the Tax Commission shall be deposited in the
Oklahoma Tax Commission Fund;
2. Transfer the amount of the claimed debt, unpaid court fines
and costs, or final judgment or so much thereof as is available to
the qualified entity;
3. Notify the debtor in writing as to how the refund was
applied; and
4. Refund to the debtor any balance remaining after deducting
the collection expense and debt, unpaid court fines and costs, or
final judgment.
F. The Tax Commission shall deduct from any state tax refund
due to a taxpayer the amount of delinquent state tax and penalty and
interest thereon, which such taxpayer owes pursuant to any state tax
law prior to payment of such refund.
G. The Tax Commission shall have first priority over all other
qualified entities when the Tax Commission is collecting a debt,
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court fines and costs, or final judgment pursuant to the provisions
of this section. Subsequent to the Tax Commission priority, a claim
filed by the Department of Human Services for the collection of
child support and spousal support shall have priority over all other
claims filed pursuant to this section. Priority in multiple claims
by other qualified entities pursuant to the provisions of this
section shall be in the order in time in which the Tax Commission
receives the claim from the qualified entities required by the
provisions of subsection B of this section.
H. The Tax Commission shall prescribe or approve forms and
promulgate rules and regulations for implementing the provisions of
this section.
I. The information obtained by a qualified entity from the Tax
Commission pursuant to the provisions of this section shall be used
only to aid in collection of the debt, unpaid court fines and costs,
or final judgment owed to the qualified entity. Disclosure of the
information for any other purpose shall constitute a misdemeanor.
Any employee of a qualified entity or person convicted of violating
this provision shall be subject to a fine not exceeding One Thousand
Dollars ($1,000.00) or imprisonment in the county jail for a term
not exceeding one (1) year, or both fine and imprisonment and, if
still employed by the qualified entity, shall be dismissed from
employment.
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J. The Tax Commission may employ the procedures provided by
this section in order to collect a debt owed to the Internal Revenue
Service if the Internal Revenue Service requires such procedure as a
condition to providing information to the Commission concerning
federal income tax.
K. The provisions of this section shall not apply to claims
filed under the provisions of Section 2906 or Section 5011 of this
title or Section 28-101 of Title 70 of the Oklahoma Statutes.
SECTION 2. This act shall become effective November 1, 2026.
COMMITTEE REPORT BY: COMMITTEE ON JUDICIARY AND PUBLIC SAFETY
OVERSIGHT, dated 02/26/2026 - DO PASS, As Amended.