Act to Establish the State Obligation Recovery Center

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Model Bill Info
Bill Title An Act to Establish the State Obligation Recovery Center
Date Finalized July 24, 2015
Date Amended September 4, 2015
Date Accessed May 2, 2018
Type Model Policy
Status Final
Task Forces Tax and Fiscal Policy
Keywords Tax Reform


This Act creates a State Obligation Recovery Center (SORC), which shall work to recover obligations owed to the state. The SORC is not a debt collection agency and the character of the obligation with the referring entity remains the same once referred to the SORC. The SORC may be used by any executive agency, the state legislature, the Judicial System, the state higher education system, and any local government.

An Act to Establish the State Obligation Recovery Center

Section 1. {Title} This act shall be known as An Act to establish the State Obligation Recovery Center

Section 2.

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:

  • Sue;
  • File liens;
  • Enter into payment agreements with debtors;
  • Impose a cost recovery charge;
  • Collect data for obligation recovery purposes;
  • Establish and maintain a centralized electronic obligation registry;
  • Exercise the settlement authority granted to it by the referring entity;
  • 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;
  • Provide information to any unit of the state regarding the non-renewal of professional licenses;
  • Provide information to the Department responsible for hunting licenses and fishing licenses regarding the non-issuance of hunting and fishing licenses;
  • Impose an administrative wage assignment process;
  • Establish and maintain a financial institution data match system;
  • Impose an administrative bank levy process;
  • Set-off against any monies to be paid by the state to a debtor for any obligation owed by the debtor;
  • Contract with collection agencies for the recovery of an obligation on behalf of the SORC;
  • Utilize any other obligation recovery methods authorized by state law; and
  • All other authority granted to the SORC by this Act.

The SORC may determine which method or combination is most suitable to recover the obligation.

A state debtor is 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:

  • Any registration for any motor vehicle, motorcycle, boat, or other conveyances;
  • Any professional license; and
  • Any hunting license or any fishing license.

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.

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.

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.

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.

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.

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.

The SORC shall have the ability to promulgate rules for its operation. The SORC shall maintain the necessary data to provide statistical measurements of the operation of the SORC as provided in this Act.


Section 3. {Severability Clause}

Section 4. {Repealer Clause}

Section 5. {Effective Date}


Approved by ALEC’s Tax and Fiscal Policy Task Force at the ALEC Annual Meeting on Thursday July 23, 2015 and Friday, July 24, 2015. Approved by ALEC Board of Directors on September 4, 2015.