Presented by:
Mickey Tait
Patti Oskvarek

 HB2236, the First Regular Session 2011, expanded the State’s Debt Offset Program to include cities and towns.
 Prior to 2011 only the Municipal Courts could participate with regards to City debt.
 City debt can include any and all debt owed to a city, including; tax, fire, utility, police, false alarm fees, or any other Accounts Receivable debt of the city.

 The AZ Debt Offset Program allows any Arizona political subdivision to submit claims, called offsets, against potential refunds due to taxpayers from the Arizona Department of Revenue.
 Out of 91 incorporated cities and towns, currently only 11 cities have joined and taken advantage of the new program.

 A city or town may submit an application to the
Debt Set Off, or DSO with the Arizona Department of Revenue unit to participate.
 Once the application is processed, the town or city is assigned an ‘agency number’ and can then begin submitting claims.
 A city or town can have multiple ‘agency numbers’ to differentiate between various departments or type of debt, like utilities or police.

 The offset can be claimed against both individuals and businesses.
 The offset claims must have a Social Security
Number for individuals or Sole Proprietorships or an Employer Identification Number for businesses.
 Once the claim is entered into the Arizona
Department of Revenue’s Debt Setoff System, future refunds will be flagged for offset.

 The status of claims can be reviewed by the city or town via website or calling DSO.
 The claims are assigned a priority:
 1 st Child Support
 2 nd Court debts
 Then all others claims based on order of submission (first come, first served).
 Claims are matched based on name and tax identification number (SSN or EIN).

 The city or town is notified when there is a match on a claim.
 The city or town must notify DSO unit if they wish to proceed with the offset.
 The taxpayer then has 30 days to protest the offset.
 The taxpayer must make their protest to the city or town that is claiming the refund.
 For each match there is a $9.00 fee.

 Most cities or towns pass this fee on the taxpayer by adding the amount to the claim.
 The city or town may then decide if they want to pursue or release the offset, the fee is still assessed for the match.
 If a refund is claimed in error, potential penalties are imposed by 42-1122 on the city or town, it is critical that disputes be resolved within allotted time periods.

Since the statutory change took effect, a survey taken with various cities indicated tax amounts collected:
CITY
AVONDALE
CHANDLER
MESA
PEORIA
PHOENIX
TAX AMOUNT
CAPTURED
$1,670
$12,790
$74,570
$11,125
46,030