The Virginia Set-off Debt Collection Act ("Act") was adopted to reduce the number of outstanding debts owed to State agencies and localities. The Act authorizes the Virginia Department of Taxation ("Department") to assist state agencies, departments and localities in collection delinquent debts by setting-off against individual income tax refunds the sum of any debt owed to the agency or locality by the individual eligible for a refund.
Thus, if an individual is entitled to an income tax refund and is also indebted to the county, the county may refund entitlement to a portion on all of the refund to pay the debt owed the county. The Act requirements, which must be followed by the county to submit a claim to the department, which shall be administered by the Treasurer's Office. In addition, the county must establish a hearing process to provide a taxpayer an opportunity to contest the validity of the debt asserted by the county and the county's claim of set-off.