TO AMEND THE LAW CONCERNING GARNISHMENT AGAINST THE STATE OR A SUBDIVISION OF THE STATE; AND TO ALLOW FOR INCOME TAX REFUNDS TO BE SUBJECT TO GARNISHMENT BY JUDGMENT CREDITORS.

2025 Regular Session Introduced by Steve Crowell and 1 co-sponsor

House Bill 1676 aimed to allow judgment creditors to garnish state-held funds, including income tax refunds, increasing debt recovery options for creditors.

Died in House Committee at Sine Die adjournment.

Summary of House Bill 1676

Bill Number: HB 1676
Title: To Amend the Law Concerning Garnishment Against the State or a Subdivision of the State; and to Allow for Income Tax Refunds to be Subject to Garnishment by Judgment Creditors.
Status: Died in House Committee at Sine Die adjournment
Introduced: March 04, 2025
Classification: Bill

Purpose and Intent

House Bill 1676 aimed to amend existing laws regarding garnishment processes in Arkansas, specifically targeting how income tax refunds could be treated in relation to judgment creditors. The bill sought to clarify and expand the circumstances under which garnishment could occur against the state or its subdivisions.

Key Provisions

The bill proposed the following significant changes:

Garnishment of State Funds:

The bill amended Arkansas Code § 16-110-413(a) to allow for the garnishment of any indebtedness, goods, chattels, moneys, credits, or effects belonging to a defendant in a civil action that are held by the State of Arkansas or its subdivisions.

Inclusion of Income Tax Refunds:

A notable provision was the inclusion of income tax refunds as subject to garnishment by judgment creditors. Previously, refunds for overpayment of Arkansas state income tax were exempt from garnishment, but this bill sought to change that.

Clarification on Existing Laws:

The bill clarified that the new provisions would not eliminate or limit existing laws related to the set-off of debts owed to state programs, ensuring that other debt recovery processes remained intact.

Impact

If enacted, HB 1676 would have had the following impacts:

Judgment Creditors: The bill would have expanded the rights of judgment creditors to recover debts by allowing them to garnish state-held funds, including income tax refunds, which could potentially increase the recovery rates for creditors.

Defendants in Civil Actions: Individuals or entities owing debts that were subject to garnishment would face increased risk of having their state-held funds, including tax refunds, seized to satisfy judgments.

Procedural Aspects

Legislative Timeline:

The bill was filed on March 04, 2025, and was read for the first time, with rules suspended for a second reading before being referred to the House Judiciary Committee.
Ultimately, the bill died in the House Committee on May 05, 2025, at Sine Die adjournment, meaning it did not progress to a vote or further consideration.

Conclusion

House Bill 1676 represented a significant shift in the garnishment laws in Arkansas, particularly concerning the treatment of income tax refunds. Although it did not advance through the legislative process, the discussions surrounding the bill highlighted ongoing concerns about debt recovery and the rights of creditors in the state.