| (a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Debtor--Any person or entity liable or potentially
liable for an obligation owed to the commission or against whom a
claim or demand for payment has been made, for Lottery Retailer related
obligations.
(2) Delinquent--Payment is past due by law or by customary
business practice, and all conditions precedent to payment have occurred
or been performed.
(3) Make demand--To deliver or cause to be delivered
by United States mail, first class, a writing setting forth the nature
and amount of the obligation owed to the commission. A writing making
demand is a "demand letter."
(4) Obligation--Any debt, judgment, claim, account,
fee, fine, tax, penalty, interest.
(5) Security--Any right to have property owned by an
entity with an obligation to the commission, for Lottery Retailer
related obligations, sold or forfeited in satisfaction of the obligation;
and any instrument granting a cause of action in favor of the State
of Texas and/or the commission against another entity and/or that
entity's property, typically, certificates of deposits and agency
agreements pursuant to assignments of certificates of deposit, but,
could include other security such as a bond, letter of credit, or
other collateral that has been pledged to the commission to secure
an obligation.
(b) Before referring any obligation to the attorney
general, the commission will:
(1) Attempt to determine the liability of each person
responsible for the obligation, whether that liability can be established
by statutory or common law. Provide the attorney general with the
name of the registered agent, and the address of the registered office
of any business organization for which a registered agent is required,
and, if known, the name and address of the principal officers of the
business entity. If the debtor is an individual, the commission will
provide the attorney general with the name and last known business
address and residence address of the individual.
(2) All demand letters will be mailed in an envelope
bearing the notation "Return Service Requested." If an address correction
is provided by the United States Postal Service, the demand letter
will be re-sent to that address prior to the referral to the attorney
general. Demand will be made upon every debtor prior to referral of
the account to the attorney general. The final demand letter will
include a statement, where practical, that the debt, if not paid,
will be referred to the attorney general.
(3) If state law allows the commission to record a
lien securing the obligation, the commission will file the lien in
the appropriate records of the county where the debtor's principal
place of business, or, where appropriate, the debtor's residence,
is located or in such county as may be required by law. The lien will
be filed as soon as practicable after determining that the account
is delinquent. After referral of the delinquency to the attorney general,
any lien securing the indebtedness will not be released, except on
full payment of the obligation, without the approval of the assistant
attorney general representing the commission in the matter.
(4) Where practicable, the commission will maintain
individual collection histories of each account in order to document
attempted contacts with the debtor, the substance of communications
with the debtor, efforts to locate the debtor and his assets, and
other information pertinent to collection of the delinquent account.
(5) Prior to referral of the obligation to the attorney
general, the commission will (except in the case where a jeopardy
determination has been made):
(A) verify the debtor's address and telephone number;
(B) transmit no more than two demand letters to the
debtor at the debtor's verified address. The first demand letter will
be sent no later than 30 days after the obligation becomes delinquent.
The second demand letter will be sent no sooner than 30 days, but
not more than 60 days, after the first demand letter;
(C) verify that the obligation is not legally uncollectible
or uncollectible as a practical matter. The commission will use its
best efforts to ensure that referred obligations are not uncollectible,
including but not limited to actions in the following circumstances:
(i) Bankruptcy. The commission will prepare and timely
file a proof of claim, when appropriate, in the bankruptcy case of
each debtor, subject to reasonable tolerances adopted by the commission.
Copies of all such proofs of claims filed should be sent to the attorney
general absent direction by the attorney general to the contrary.
The commission will maintain records of notices of bankruptcy filings,
dismissals and discharge orders received from the United States bankruptcy
courts to enable the commission to ascertain whether the collection
of the claim is subject to the automatic stay provisions of the bankruptcy
code or whether the debt has been discharged. The commission will
seek the assistance of the attorney general in bankruptcy collection
matters where necessary, including the filing of a notice of appearance
and preparation of a proof of claim.
(ii) Limitations. If the obligation is subject to an
applicable limitations provision that would prevent suit as a matter
of law, the obligation will not be referred unless circumstances indicate
that limitations has been tolled or is otherwise inapplicable.
(iii) Corporations. If a corporation has been dissolved,
has been in liquidation under Chapter 7 of the United States Bankruptcy
Code, or has forfeited its corporate privileges or charter, or, in
the case of a foreign corporation, had its certificate of authority
revoked, the obligation will be referred unless circumstances indicate
that the account is clearly uncollectible.
(iv) Out-of-state debtors. If the debtor is an individual
and is located out-of-state, or outside the United States, the matter
will not be referred unless a determination is made that the domestication
of a Texas judgment in the foreign forum would more likely than not
result in collection of the obligation, or that the expenditure of
commission funds to retain foreign counsel to domesticate the judgment
and proceed with collection attempts is justified.
(v) Deceased debtors. If the debtor is deceased, the
commission will file a claim in each probate proceeding administering
the decedent's estate. If such probate proceeding has concluded, and
there are no remaining assets of the decedent available for distribution,
the delinquent obligation will be classified as uncollectible and
will not be referred. In cases where a probate administration is pending,
or where no administration has been opened, all referred obligations
will include an explanation of any circumstances indicating that the
decedent has assets available to apply toward satisfaction of the
obligation.
(6) In the case, where factors come to the attention
of the commission, which indicate that the collection of the debt
due to the state is jeopardized, or where the property and assets
of the commission entrusted to the debtor are in jeopardy, the commission
may issue a jeopardy determination stating the amount due and that
the collection is in jeopardy, and that the amount due the commission
is immediately due and payable.
(7) Not later than the 180th day after the date an
obligation becomes delinquent, the commission will report the uncollected
and delinquent obligation to the attorney general for further collection
efforts as hereinafter provided.
(8) In the case of a jeopardy determination, the account
may be referred to the attorney general at any time after the expiration
of 20 days after service by personal service or by mail.
(9) The commission will adopt reasonable tolerances,
in consultation with the attorney general, below which an obligation
shall not be referred. Factors to be considered in establishing tolerances
include: the size of the debt; the existence of any security; the
likelihood of collection through passive means such as the filing
of a lien where applicable; expense to the commission and to the attorney
general in attempting to collect the obligation; and the availability
of resources both within the commission and within the Office of the
Attorney General to devote to the collection of the obligation.
(10) The commission will utilize the "warrant hold"
procedures of the Comptroller of Public Accounts authorized by the
Texas Government Code, §403.055, to ensure that no treasury warrants
are issued to debtors until the debt is paid. (See Accounting Policy
Statement 28, "Reporting of State Debts and Hold Offset Procedures,"
issued November 22, 2005, updated September 18, 2015, and as it may
be amended, available on the Comptroller of Public Accounts' website,
at https://fmx.cpa.texas.gov/fm/pubs/aps/).
(c) Referral to the attorney general.
Cont'd... |
