Section 171-D. Certain overpayments credited against defaulted governmental education loans

(1) The commissioner, on behalf of the tax  commission,  shall  enter into a written agreement with the president of the New York
  state  higher  education  services  corporation,  on  behalf   of   such
  corporation,  which  shall  set  forth  the procedures for crediting any
  overpayment by an individual, estate or trust of income tax  imposed  by
  article  twenty-two  of  this  chapter,  city  personal  income  tax  on
  residents imposed pursuant to the authority of article  thirty  of  this
  chapter,  city income tax surcharge on residents imposed pursuant to the
  authority of article thirty-A of this  chapter,  city  earnings  tax  on
  nonresidents  imposed  pursuant to the authority of former article two-E
  of the general city law and city earnings tax  on  nonresidents  imposed
  pursuant  to  the  authority of article thirty-B of this chapter and the
  interest on such overpayments against  the  amount  of  any  default  in
  repayment  of  any  governmental education loan owed by such individual,
  estate or trust of which the  commissioner  has  been  notified  by  the
  president  of  the  New York state higher education services corporation
  pursuant to the provisions of  such  agreement.  For  purposes  of  this
  section,  "governmental  education  loan"  shall mean any education loan
  debt, including judgments,  owed  to  the  federal  or  New  York  state
  government  that  is  being  collected  by  the  New  York  state higher
  education services corporation.
    (2) Such agreement shall apply only to the  amount  of  a  default  in
  repayment  of any governmental education loan debt, including judgments,
  being  collected  by  the  New  York  state  higher  education  services
  corporation.  Such  agreement  shall  require  the New York state higher
  education  services  corporation  to   satisfy   the   requirements   of
  subdivision three of section one hundred seventy-one-f of this article.
    (3) Such agreement shall include:
    (a)  the  procedure  under  which  the New York state higher education
  services corporation shall notify  the  commissioner  of  a  default  in
  repayment  of  a  governmental education loan, such procedure to specify
  when the  commissioner  shall  be  notified  and  the  content  of  such
  notification;
    (b)  the  minimum  amount  outstanding  on a default in repayment of a
  governmental  education  loan  against  which  the  commissioner  shall,
  pursuant to this section, credit an overpayment;
    (c)  the  procedure  for  reimbursement of the commissioner by the New
  York state higher education services corporation for the  full  cost  of
  carrying out the procedures authorized by this section;
    (d)  such  other  matters  as the parties to such agreement shall deem
  necessary to carry out the provisions of this section; and
    (e) the procedure for reimbursement of the comptroller by the New York
  state higher education services corporation for overpayment and interest
  thereon which has  been  credited  against  the  amount  of  default  in
  repayment  of  a governmental education loan owed by a taxpayer filing a
  joint return, but which has been refunded by the  comptroller,  pursuant
  to  paragraph  six of subsection (b) of section six hundred fifty-one of
  this chapter, to a spouse not  liable  for  the  amount  of  default  in
  repayment of a governmental education loan owed by such taxpayer.
    (4)  (i)  In  calculating  the  amount  of an overpayment and interest
  thereon which shall be credited against  the  amount  of  a  default  in
  repayment  of  a  governmental  education  loan  owed by a taxpayer, the
  commissioner shall first credit the  overpayment  and  interest  thereon
  against any:
    (A)  liability  of such taxpayer in respect of any tax imposed by this
  chapter;

    (B) liability of such taxpayer for any tax  imposed  pursuant  to  the
  authority  of  this chapter or any other law if such tax is administered
  by the tax commission;
    (C)  estimated  tax  for  the succeeding taxable year if such taxpayer
  claims such overpayment  or  a  portion  thereof  as  a  credit  against
  estimated  tax  for  such succeeding taxable year pursuant to subsection
  (e) of section six hundred eighty-six of this chapter or subdivision (e)
  of section 11-1786 of the administrative code of the city  of  New  York
  for  any  tax  imposed  pursuant to the authority of this chapter or any
  other law if such tax is administered by the tax commission; and
    (D) past-due support owed by the  taxpayer  pursuant  to  section  one
  hundred seventy-one-c of this article.
    (E) the amount of a default in repayment of a state university loan or
  city  university  loan  pursuant to section one hundred seventy-one-e of
  this article.
    (F) the amount of a past-due legally enforceable debt owed to a  state
  agency pursuant to section one hundred seventy-one-f of this article.
    (G) the amount of a city of New York tax warrant judgment debt owed to
  the  city  of  New York pursuant to section one hundred seventy-one-l of
  this article.
    (ii) Only the  balance  remaining,  after  such  overpayment  and  the
  interest thereon has been credited as described in paragraph (i) of this
  subdivision,  shall  be certified as an overpayment plus any interest to
  be  credited  against  the  amount  of  a  default  in  repayment  of  a
  governmental  education  loan,  with the remainder to be refunded to the
  taxpayer.
    (5) The tax commission shall certify  to  the  comptroller  the  total
  amount  of  the  overpayment  and  the interest on such overpayment, the
  amount of such overpayment  and  the  interest  on  such  amount  to  be
  credited   against   the  amount  of  the  default  in  repayment  of  a
  governmental education loan and the  balance  of  such  overpayment  and
  interest to be refunded to the taxpayer.
    (6) The commissioner shall notify the taxpayer making the overpayment,
  in  writing,  of the amount of such overpayment and the interest thereon
  certified to the comptroller as the amount to be  credited  against  the
  amount  of a default in repayment of a governmental education loan. Such
  notice shall include notification to any other person who may have filed
  a joint return with the taxpayer of the steps such other person may take
  in order to secure his or her proper share of the refund.
    (7) From the time the state tax commission is notified by the New York
  state higher education services corporation of an individual's, estate's
  or trust's default in repayment of a governmental education  loan  under
  the agreement provided for in this section, the state tax commission and
  the  department shall be relieved from all liability to such individual,
  estate or trust, their assigns, successors, heirs or representatives for
  the amount of an overpayment and interest on such  amount  certified  to
  the  comptroller  to  be  credited  against  the  amount  of  default in
  repayment of a governmental education loan and such  individual,  estate
  or trust shall have no right to commence a court action or proceeding or
  to  any  other  legal  recourse  against the state tax commission or the
  department to recover such overpayment or such interest certified to the
  comptroller to be credited against the amount of default in repayment of
  a governmental education loan. Provided, however, nothing  herein  shall
  be   construed  to  prohibit  such  individual,  estate  or  trust  from
  proceeding  against  the  New  York  state  higher  education   services
  corporation to recover that part of such overpayment or interest thereon
  so  certified  to the comptroller to be credited against the amount of a
  default in repayment of a governmental education loan which  is  greater

  than the amount of such default owed by such individual, estate or trust
  on the date of such certification.
    (8)  The tax commission shall promulgate such rules and regulations as
  it deems necessary to carry out the provisions of this section.