Thousands of Iowans may be wondering why they haven’t received their state tax refund this year. It could be because they have overdue court fines and fees. Steve Davis, a spokesperson for the Iowa Supreme Court, says county clerks of court use an "income tax offset" procedure to collect those unpaid debts.
Davis says Iowans that do owe court fines and fees could get a letter in the mail from the Department of Revenue and Finance explaining that their tax refund is being withheld until they pay off their debt to the courts. Clerk of Court offices in all 99 Iowa counties receive a lot of angry phone calls this time of year from people that receive a tax offset letter.
"But once they talk to someone there, they realize that, yes, it is a fine. It’s pretty black and white, so there’s not a lot of room for argument. So then, they go down and pay their fine…that’s generally what happens," Davis said.
Court officials say the total statewide unpaid debt, which has accumulated for decades, stands at roughly $476 million dollars. The Iowa courts have been allowed to use the income tax offset procedure since 1994. Now, some clerk of court offices are digging through files that predate the state computer system.
"They’ll go through the files and find things that are possibly 20 to 25 years old," Davis said. Last year, the Iowa court system collected nearly $4 million dollars through the income tax offsets. The state also collects unpaid court debts by withholding lottery winnings or denying individuals a drivers license, until they pay their old fees or fines.
Davis says some habitual offenders, that are mostly likely in prison, have huge amounts of court debt that the state will never be able to collect.