House Bill 788-First Edition

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2005

H 1

HOUSE BILL 788

Short Title: Crime Victims Restitution Improvement Act.		(Public)
Sponsors:	Representatives Eddins, Holliman (Primary Sponsors); Faison, LaRoque, Pate, and Setzer.
Referred to:	Judiciary I.

March 17, 2005

A BILL TO BE ENTITLED

AN ACT to improve the collection and distribution of restitution for crime victims in north carolina and to direct the administrative office of the courts to study third-party collection for the collection of restitution and other court costs.

The General Assembly of North Carolina enacts:

restitution for funeral expenses mandatory

SECTION 1. G.S. 15A-1340.36(b) reads as rewritten:

"(b) The court may require the defendant to make full restitution no later than a certain date or, if the circumstances warrant, may allow the defendant to make restitution in installments over a specified time period.Funeral and Burial Expenses Mandatory. - When a defendant is convicted of an offense that proximately resulted in the death of a victim, the amount of restitution shall always include all necessary expenses incurred by or on behalf of the victim's estate for funeral and burial expenses and related services, including the cost of a headstone, if any."

ability to pay not a factor in determining amount of restitution

SECTION 2.1. G.S. 15A-1340.34 reads as rewritten:

"§ 15A-1340.34. Restitution generally.

(a) When sentencing a defendant convicted of a criminal offense, the court shall determine whether the defendant shall be ordered to make restitution to any victim of the offense in question. For purposes of this Article, the term "victim" means a person directly and proximately harmed as a result of the defendant's commission of the criminal offense.

(b) If the defendant is being sentenced for an offense for which the victim is entitled to restitution under Article 46 of this Chapter, the court shall, in addition to any penalty authorized by law, require that the defendant make restitution to the victim or the victim's estate for any injuries or damages arising directly and proximately out of the offense committed by the defendant. If the defendant is placed on probation or post-release supervision, any restitution ordered under this subsection shall be a condition of probation as provided in G.S. 15A-1343(d) or a condition of post-release supervision as provided in G.S. 148-57.1.law:

(1) Enter a judgment against the defendant in favor of the victim or the victim's estate under G.S. 15A-1340.38 for the full amount of the restitution, which shall be determined in accordance with G.S. 15A-1340.35 and G.S. 15A-1340.36(a);

(2) If the defendant is placed on probation, require payment of restitution as a condition of probation, in the amount which the court determines the defendant is able to pay as provided in G.S. 15A-1340.36(b) and (c); and

(3) If the defendant is sentenced to active punishment, recommend that the defendant be required to pay restitution out of work release earnings and as a condition of post-release supervision.

(c) When subsection (b) of this section does not apply, the court may, in addition to any other penalty authorized by law, require that the defendant make restitution to ~~the victim or the victim's estate~~ any other person for any injuries or damages arising directly and proximately out of the offense committed by the ~~defendant.~~ defendant, but no judgment shall be entered under G.S. 15A-1340.38 in favor of the person and the remedies in G.S. 15A-1340.39 and G.S. 15A-1340.40 shall not apply."

SECTION 2.2. G.S. 15A-1340.36, as amended by Section 1 of this act, reads as rewritten:

"§ 15A-1340.36. Determination of ~~restitution.~~the amount of restitution due each victim; entry of civil judgment.

(a) Amount of Restitution. - In determining the amount of restitution to be made, the court shall take into consideration the resources of the defendant including all real and personal property owned by the defendant and the income derived from the property, the defendant's ability to earn, the defendant's obligation to support dependents, and any other matters that pertain to the defendant's ability to make restitution, but the court is not required to make findings of fact or conclusions of law on these matters. The amount of restitution must be limited to that supported by the record, and the court may order partial restitution when it appears that the damage or loss caused by the offense is greater than that which the defendant is able to pay. If the court orders partial restitution, the court shall state on the record the reasons for such an order.The court shall determine the total amount of restitution to which each victim is entitled considering only the factors specified in G.S. 15A-1340.35. The court shall not consider the defendant's ability to pay in making this determination. The total amount of the restitution must be limited to that supported by the record.

(b) Funeral and Burial Expenses Mandatory. - When a defendant is convicted of an offense that proximately resulted in the death of a victim, the amount of restitution shall always include all necessary expenses incurred by or on behalf of the victim's estate for funeral and burial expenses and related services, including the cost of a headstone, if any.

(c) When an active sentence is imposed, the court shall consider whether it should recommend to the Secretary of Correction that restitution be made by the defendant out of any earnings gained by the defendant if the defendant is granted work-release privileges, as provided in G.S. 148-33.2. The court shall also consider whether it should recommend to the Post-Release Supervision and Parole Commission that restitution by the defendant be made a condition of any parole or post-release supervision granted the defendant, as provided in G.S. 148-57.1.Entry of Judgment. - Upon determining the total amount of restitution owed to each victim, the court shall enter a judgment in accordance with G.S. 15A-1340.38 in favor of each victim and against the defendant for that amount."

SECTION 2.3. Article 81C of Chapter 15A of the General Statutes is amended by adding a new section to read:

"§ 15A-1340.36.1. Determination of restitution payment schedule.

(a) Payment Upon Sentencing. - If the defendant is able to pay the total amount of restitution ordered at the time of sentencing, the court shall require payment of that total by 5:00 P.M. of the day on which the defendant is sentenced. If the defendant is able to pay only a portion of that total, the court shall require payment of that entire portion by 5:00 P.M. of the day on which the defendant is sentenced and establish a schedule of payments for the remainder of the total in accordance with this section.

(b) Payment While on Probation. - If the defendant is placed on supervised or unsupervised probation, the court shall:

(1) Determine the portion of the total amount of restitution ordered that the defendant will be able to pay during the term of probation.

(2) Require as a condition of probation that the defendant pay the entire portion that the defendant is able to pay. If the defendant is able to pay the total amount of restitution ordered, the court shall require payment of that total. If the defendant is able to pay only a portion of that total, the court shall require payment of that entire portion.

(3) Establish a schedule of payments or other method of payment that assures that the defendant will, before the end of the term of probation, pay the entire portion that the defendant is able to pay or delegate to a probation officer the authority to do so.

(c) Payment While Serving Active Sentence. - If the defendant is sentenced to an active sentence and the court recommends that the defendant pay restitution out of work release earnings, the court shall enter in the sentencing judgment the total amount of restitution, as determined under G.S. 15A-1340.36, but shall not specify the portion to be paid out of work release earnings. At the time when the defendant is granted work release privileges, the Department of Correction shall:

(1) Determine the portion of the total restitution that the defendant will be able to pay from work release earnings.

(2) Deduct from the defendant's work release earnings and apply, as provided in G.S. 148-33.2, the entire portion of restitution that the defendant is able to pay. If the defendant is able to pay the total amount of restitution, the Department shall require payment of that total. If the defendant is able to pay only a portion of that total, the Department shall require payment of that entire portion.

(d) Payment While on Post-Release Supervision. - If the defendant is sentenced to an active sentence and the court recommends that the defendant pay restitution as a condition of release under post-release supervision, the court shall enter in the sentencing judgment the total amount of restitution, as determined under G.S. 15A-1340.36, but shall not specify the portion to be paid as a condition of release under post-release supervision. At the time when the defendant is released under post-release supervision, the Parole and Post-Release Supervision Commission shall:

(1) Determine the portion of the total restitution that the defendant will be able to pay during the term of post-release supervision.

(2) Require as a condition of release under post-release supervision that the defendant pay the entire portion that the defendant is able to pay. If the defendant is able to pay the total amount ordered, the Commission shall require payment of that total. If the defendant is able to pay only a portion of that total, the Commission shall require payment of that entire portion.

(3) Establish a schedule of payments or other method of payment that assures that the defendant will, before the end of the term of post-release supervision, pay the entire amount that the defendant is able to pay or delegate to a post-release supervision officer the authority to do so.

(e) Factors for Determining Ability to Pay and Payment Schedule. - In determining the defendant's ability to pay restitution and the manner in which the restitution is to be made, all the resources of the defendant shall be taken into consideration, including without limitation:

(1) All real and personal property owned by the defendant and the income derived from the property,

(2) The defendant's present and potential future ability to earn,

(3) The defendant's obligation to support dependents,

(4) Restitution owed to other victims, and

(5) Any other matters that pertain to the defendant's ability to make restitution.

The court is not required to make findings of fact or conclusions of law under this subsection."

SECTION 2.4. G.S. 15A-1343(d) reads as rewritten:

"(d) Restitution as a Condition of Probation. - As a condition of probation, a defendant may be required to make restitution or reparation to an aggrieved party or parties who shall be named by the court for the damage or loss caused by the defendant arising out of the offense or offenses committed by the defendant. When restitution ~~or reparation~~ entitled to restitution under Article 46 of this Chapter is a condition imposed, the court shall ~~take into consideration the factors set out~~ determine and require payment of restitution as provided in ~~G.S. 15A-1340.35 and G.S. 15A-1340.36.~~G.S. 15A-1340.35, 15A-1340.36, and 15A-1340.36.1. As used herein, "reparation" shall include but not be limited to the performing of community services, volunteer work, or doing such other acts or things as shall aid the defendant in his rehabilitation. As used herein "aggrieved party" includes individuals, firms, corporations, associations, other organizations, and government agencies, whether federal, State or local, including the Crime Victims Compensation Fund established by G.S. 15B-23. A government agency may benefit by way of reparation even though the agency was not a party to the crime provided that when reparation is ordered, community service work shall be rendered only after approval has been granted by the owner or person in charge of the property or premises where the work will be done."

SECTION 2.5. G.S. 148-33.2 reads as rewritten:

"§ 148-33.2. Restitution by prisoners with work-release privileges.

(a) Repealed by Session Laws 1985, c. 474, s. 4.

(b) As a rehabilitative measure, the Secretary of the Department of Correction is authorized to require any prisoner granted work-release privileges to make restitution or reparation to an aggrieved party from any earnings gained by the defendant while on work release when the sentencing court recommends that restitution or reparation be paid by the defendant out of any earnings gained by the defendant if he is granted work-release privileges and out of other resources of the defendant, including all real and personal property owned by the defendant and the income derived from such property. ~~The~~ Except when restitution is recommended for a victim entitled to restitution under Article 46 of Chapter 15A of the General Statutes, the Secretary shall not be bound by such recommendation, but if they elect not to implement the recommendation, they shall state in writing the reasons therefor, and shall forward the same to the sentencing court.

(c) When an active sentence is imposed, the court shall consider whether, as a rehabilitative measure, it should recommend to the Secretary of Correction that restitution or reparation be made by the defendant out of any earnings gained by the defendant if he is granted work-release privileges and out of other resources of the defendant, including all real and personal property owned by the defendant, and income derived from such property. If the court determines that restitution or reparation should not be recommended, it shall so indicate on the commitment. If, however, the court determines that restitution or reparation should be recommended, the court shall make its recommendation a part of the order committing the defendant to custody. The recommendation shall be in accordance with the applicable provisions of G.S. 15A-1343(d) and Article 81C of Chapter 15A of the General Statutes. If the offense is one in which there is evidence of physical, mental or sexual abuse of a minor, the court may order the defendant to pay from work release earnings the cost of rehabilitative treatment for the minor. The Administrative Office of the Courts shall prepare and distribute forms which provide ample space to make restitution or reparation recommendations incident to commitments, which forms shall be conveniently structured to enable the sentencing court to make its recommendation.

(d) The Secretary of the Department of Correction shall establish rules and regulations to implement this section, which shall include adequate notice to the prisoner that the payment of restitution or reparation from any earnings gained by the prisoner while on work release is being considered as a condition of any work-release privileges granted the prisoner, and opportunity for the prisoner to be heard. Such rules and regulations shall also provide additional methods whereby facts may be obtained to supplement the recommendation of the sentencing court. When work release privileges are granted to a prisoner who has been ordered to pay restitution to a victim entitled to restitution under Article 46 of Chapter 15A of the General Statutes, the amount to be deducted from the prisoner's work release earnings shall be determined as provided in G.S. 15A-1340.35, 15A-1340.36, and 15A-1340.36.1, and that amount shall be so deducted."

SECTION 2.6. G.S. 148-57.1 reads as rewritten:

"§ 148-57.1. Restitution as a condition of parole or post-release supervision.

(a) Repealed by Session Laws 1985, c. 474, s. 5.

(b) As a rehabilitative measure, the Post-Release Supervision and Parole Commission is authorized to require a prisoner to whom parole or post-release supervision is granted to make restitution or reparation to an aggrieved party as a condition of parole or post-release supervision when the sentencing court recommends that restitution or reparation to an aggrieved party be made a condition of any parole or post-release supervision granted the defendant. When imposing restitution as a condition and setting up a payment schedule for the restitution, the Post-Release Supervision and Parole Commission shall take into consideration the resources of the defendant, including all real and personal property owned by the defendant and the income derived from such property, his ability to earn, and his obligation to support dependents. ~~The~~ Except when restitution is recommended for a victim entitled to restitution under Article 46 of Chapter 15A of the General Statutes, the Post-Release Supervision and Parole Commission shall not be bound by such recommendation, but if it elects not to implement the recommendation, it shall state in writing the reasons therefor, and shall forward the same to the sentencing court.

(c) When an active sentence is imposed, the court shall consider whether, as a rehabilitative measure, it should recommend to the Post-Release Supervision and Parole Commission that restitution or reparation by the defendant be made a condition of any parole or post-release supervision granted the defendant. If the court determines that restitution or reparation should not be recommended, it shall so indicate on the commitment. If, however, the court determines that restitution or reparation should be recommended, the court shall make its recommendation a part of the order committing the defendant to custody. The recommendation shall be in accordance with the applicable provisions of Article 81C of Chapter 15A of the General Statutes. The Administrative Office of the Courts shall prepare and distribute forms which provide ample space to make restitution or reparation recommendations incident to commitments, which forms shall be conveniently structured to enable the sentencing court to make its recommendation.

If the offense is one in which there is evidence of physical, mental or sexual abuse of a minor, the court may order, as a condition of parole or post-release supervision, that the defendant pay the cost of any rehabilitative treatment for the minor.

(d) The Post-Release Supervision and Parole Commission shall establish rules and regulations to implement this section, which shall include adequate notice to the prisoner that the payment of restitution or reparation by the prisoner is being considered as a condition of any parole or post-release supervision granted the prisoner, and opportunity for the prisoner to be heard. Such rules and regulations shall also provide additional methods whereby facts may be obtained to supplement the recommendation of the sentencing court. When a prisoner is released under post-release supervision, the Commission shall determine and require payment of restitution as provided in G.S. 15A-1340.35, 15A-1340.36, and 15A-1340.36.1."

NO early termination of probation until completion of restitution obligation

SECTION 3. G.S. 15A-1342(b) reads as rewritten:

"(b) Early Termination. - The court may terminate a period of probation and discharge the defendant at any time earlier than that provided in subsection (a) if warranted by the conduct of the defendant and the ends of ~~justice.~~ justice, provided that the court shall not terminate a period of probation or discharge the defendant at any time earlier than that provided in subsection (a) unless the defendant has paid in full all restitution payable, as a condition of probation, to a victim entitled to restitution under Article 46 of this Chapter. Any order remitting any unpaid portion of such restitution is null and void."

distribution of restitution payments to victim's next of kin after closing of estate

SECTION 4. Article 21 of Chapter 28A of the General Statutes is amended by adding a new section to read:

"§ 28A-21-3.2. Restitution payments; list of next of kin.

(a) The following definitions apply in this section:

(1) "Victim" means a victim as defined in G.S. 15A-830(a)(7).

(2) "Restitution payment" means any amount payable to a victim pursuant to Article 81C of Chapter 15A of the General Statutes.

(b) A personal representative or collector of the estate of a victim may file, along with a final account, a list of the victim's next of kin who are entitled to exercise the victim's rights pursuant to G.S. 15A-830(b) if all of the following conditions are met:

(1) There are no unsatisfied creditors.

(2) There are no unsatisfied general monetary bequests.

(3) All assets other than any potential future restitution payments have been distributed.

(1) The name and address of the personal representative or collector.

(2) The name and social security number of the decedent.

(3) The name and address, if known, of all next of kin who are entitled to exercise the victim's rights pursuant to G.S. 15A-830(b).

(4) The share of each next of kin in the restitution payable to the victim.

(d) The clerk of superior court must review the list of next of kin to determine if the listed next of kin and their shares of potential future restitution payments are in accordance with the Intestate Succession Act. If so, the clerk shall accept the list of next of kin for filing and endorse the clerk's approval thereon, which shall be prima facie evidence of correctness.

(e) Upon determination by the clerk of superior court that the estate of a victim has been closed, all restitution payments may be paid directly to those next of kin and in those shares set forth on a list of next of kin filed under this section, without the estate's having to be reopened under G.S. 28A-23-5.

(f) The estate of a decedent who is entitled to any restitution payment may be reopened, if necessary, in accordance with G.S. 28A-23-5 in order to file a list of next of kin under this section.

income withholding

SECTION 5.1. G.S. 15A-832 is amended by adding a new subsection to read:

"(h) In order to aid the court in ordering income withholding under G.S. 15A-1340.39, the prosecuting attorney shall make reasonable efforts to identify all of the defendant's sources of disposable income as defined in that section and shall, at the sentencing hearing, provide the court with the name and address of each employer paying disposable income to the defendant and the amount of the defendant's disposable income from each such employer."

SECTION 5.2. Article 81C of Chapter 15A of the General Statutes is amended by adding a new section to read:

"§ 15A-1340.39. Income withholding to enforce restitution as a condition of probation.

(a) Definitions. - The following definitions apply in this section:

(1) "Defendant" means a person who is convicted of a crime to which the Crime Victims' Rights Act applies, and who is required to pay restitution as a condition of probation.

(2) "Disposable income" means any form of periodic payment to an individual, regardless of sources, including but not limited to wages, salary, commission, self-employment income, bonus pay, severance pay, sick pay, incentive pay, vacation pay, compensation as an independent contractor, worker's compensation, disability, annuity, survivor's benefits, pension and retirement benefits, interest, dividends, rents, royalties, trust income and other similar payments, which remain after the deduction of amounts for federal, State, and local taxes, Social Security, and involuntary retirement contributions. However, Supplemental Security Income, Work First Family Assistance, and other public assistance payments shall be excluded from disposable income. For wage payors, disposable income means "wage" as it is defined by G.S. 95-25.2(16).

(3) "Division" means the Division of Community Correction of the Department of Correction.

(4) "Employer" means any employer or other payor of disposable income.

(b) Entry of Income Withholding Order. - Whenever the court places a defendant on supervised or unsupervised probation and requires payment of restitution as a condition of probation, the court shall enter an order for income withholding pursuant to this section, if both of the following conditions are also met:

(1) The term of probation is six months or longer.

(2) The defendant is required to make periodic payments throughout the term of probation, according to a schedule set by the court or by a probation officer.

(c) Determinations by Court. - Before entering an order for income withholding, the court shall determine all of the following:

(1) The defendant's total disposable income from all sources.

(2) The names and addresses of the defendant's employers.

(3) The defendant's pay period for each employer (e.g. weekly, bi-weekly, semi-monthly or monthly).

(4) The amount to be withheld by each employer for each pay period.

(d) Multiple Withholding Orders. - If, at the time of sentencing, a defendant is already subject to one or more withholding orders under this section:

(1) The defendant shall so notify the court at the time of sentencing.

(2) The court shall then determine whether the defendant has enough disposable income so that, after all prior withholding orders are complied with, further amounts may be withheld under this section without exceeding the aggregate withholding limits specified in section 303(b) of the Consumer Credit Protection Act, 15 U.S.C. § 1673(b).

(3) If so, the court shall order that any available amount be withheld from the defendant's disposable income.

(4) If not, the court shall deny withholding.

(e) Amount Withheld. - The amount to be withheld shall include:

(1) The lesser of:

a. The amount of the periodic payment that the defendant is required to make as a condition of probation, pro rated if necessary per pay period,

b. The amount ordered withheld pursuant to subsection (d) of this section,

c. The maximum withholding allowable under section 303(b) of the Consumer Credit Protection Act, 15 U.S.C. § 1673(b), and

(2) A processing fee of two dollars ($2.00) to cover the cost of withholding, to be retained by the employer for each withholding unless waived by the employer.

(f) Notice to Employers. - Immediately upon entry of an income withholding order under this section, a notice of obligation to withhold shall be served on each employer, subject to the following provisions:

(1) The notice shall include all of the following:

a. The amount of disposable income upon which the withholding is based.

b. The pay period upon which the withholding is based.

c. The amount to be withheld each pay period.

d. The maximum percentage of the defendant's disposable income that may be withheld under section 303(b) of the Consumer Credit Protection Act, 15 U.S.C. §1673(b).

e. The address of the clerk of superior court to which the amounts withheld shall be remitted.

f. All of the employer's duties under subsections (g), (n), and (o) of this section and the penalties for failing to perform those duties.

g. The case number of the case in which the income withholding has been ordered.

(2) The notice shall be served pursuant to Rule 5 of the North Carolina Rules of Civil Procedure, G.S. 1A-1, Rule 5. If the notice is mailed, service shall be effective upon mailing.

(3) If the defendant is placed on supervised probation, the Division shall serve the notice.

(4) If the defendant is placed on unsupervised probation, the clerk of superior court shall service the notice.

(g) Employer's Responsibilities. - Upon service of a notice of obligation to withhold, each employer shall do all of the following:

(1) If the defendant's disposable income is equal to or greater than that specified in the notice, withhold the amount specified in the notice from the defendant's disposable income.

(2) If a lesser amount of disposable income is available for any pay period, withhold a proportionate part of the lesser amount.

(3) Begin withholding from the defendant's disposable income for the first pay period that begins 14 or more days after service of the notice.

(4) Remit the amount withheld to the clerk of superior court at the address provided in the notice.

(5) Include with the remission the name of the defendant, the amount remitted and the case number of the case in which the withholding was ordered.

(6) Continue withholding until further notice from the court.

(7) Withhold under this section after withholding for child support and before withholding for any other obligation.

(8) Promptly notify the court, in writing, if the employer has been served with one or more other orders to withhold income under this section.

(9) Notify the court immediately when the defendant terminates employment or otherwise ceases to be entitled to disposable income from the employer and provide the defendant's last known address and the name and address of the defendant's new employer, if known.

(h) Proceeding to Impose Sanctions. - The court shall impose sanctions as provided in subsection (i) of this section if it finds that an employer has failed to comply with any of its duties under subsection (g) of this section. The procedure shall be as follows:

(1) A proceeding to impose sanctions shall be commenced by filing a motion in the criminal case in which the judgment containing the withholding order was entered.

(2) A motion under this subsection may be filed by the following:

a. The Division, if the defendant is on supervised probation.

b. The clerk of superior court, if the defendant is on unsupervised probation.

c. The victim, if the victim has verified information showing that the employer has failed to comply with any of its duties under subsection (g) of this section, and no motion has been filed by the Division or the clerk of superior court.

(3) When filed, each motion shall be placed on the civil motion calendar for the trial division in which the judgment was entered and scheduled for the earliest available date that is not less than 30 days after the motion is filed.

(4) The moving party shall immediately serve a copy of the motion and a notice of the hearing on the employer.

(5) Service shall be made pursuant to Rule 4 of the North Carolina Rules of Civil Procedure, G.S. 1A-1, Rule 4.

(6) If, after the hearing, the court finds by a preponderance of the evidence that the employer has, willfully and without justification or excuse, failed to perform one or more of its duties under subsection (g) of this section, the court shall impose sanctions as provided in subsection (i) of this section.

(i) Sanctions. - The sanctions that may be imposed upon an employer for failure to perform one or more of its duties under subsection (g) of this section are:

(1) First incident:

a. An order that the employer commence withholding beginning with the first pay period that commences after the order, and

b. An order to comply promptly with any other duty under subsection (g) of this section.

(2) Second incident:

a. Any sanction authorized under subdivision (1) of this subsection, and

b. Civil or criminal contempt.

(3) Third and subsequent incidents:

a. Any sanction authorized under subdivisions (1) or (2) of this subsection, and

b. For cases of failure to withhold, a civil penalty not greater than the total amount that has not been withheld since original service of the notice, which penalty shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2.

(j) Modification or Termination. - The court may modify or terminate an income withholding order entered under this section, as follows:

(1) The following are grounds for modification or termination:

a. An employer is unable for any reason to comply with withholding as ordered by the court.

b. The defendant's employer or disposable income has changed since an order for withholding was most recently entered in the case.

c. Any other good cause shown.

(2) A motion under this section may be filed by an employer, the victim, the Division, or a prosecuting attorney.

(4) The moving party shall serve a copy of the motion and a notice of the hearing on the other parties specified in subdivision (1).

(5) Service shall be made pursuant to Rule 5 of the North Carolina Rules of Civil Procedure, G.S. 1A-1, Rule 5. If service is made by mail, service is effective upon mailing.

(6) If, after the hearing, the court finds by a preponderance of the evidence that one or more grounds for modification or termination of withholding exist, it shall terminate or appropriately modify the withholding.

(k) Change in Employment. - When a defendant changes employers after service on a current employer of a notice of obligation to withhold under this section:

(1) The defendant shall promptly provide the following information:

a. The name and street address of the new employer,

b. The defendant's disposable income from that employer.

(2) The information shall be provided to:

a. The Division, if the defendant is on supervised probation,

b. The clerk of superior court, if the defendant is on unsupervised probation.

(3) Upon receipt of new employer information under this subsection, a notice of obligation to withhold shall be served on the new employer as provided in subsection (h) of this section.

(l) Termination Upon Completion of Probation. - All income withholding orders entered under this section shall terminate when the defendant's probation is revoked or terminated or expires at the end of the term of probation. Notice of termination shall be given to each employer that is under a current obligation to withhold under this section. Notice shall be given by:

(1) The Division, if the defendant is on supervised probation.

(2) The clerk of superior court, if the defendant is on unsupervised probation.

(m) Clerk's Responsibilities. - Upon receipt of any funds remitted by an employer under this section, the clerk of superior court shall enter the amount remitted as a partial payment on all of the defendant's monetary conditions of probation and shall disburse those funds as provided by law. If a restitution judgment has been docketed in favor of the victim pursuant to G.S. 15A-1340.38, payments received through income withholding shall be applied to that judgment as provided in subsection (c) of that section.

(n) Civil Penalty for Wrongful Violation by Employer. - An employer shall not discharge from employment, refuse to employ, or otherwise take disciplinary action against any defendant solely because the defendant is subject to withholding under this section. When an employer violates this subsection:

(1) The employer shall be liable, in a proceeding pursuant to subsection (h) of this section, for a civil penalty as follows:

a. For a first offense, the civil penalty shall be one hundred dollars ($100.00).

b. For second offense, the civil penalty shall be five hundred dollars ($500.00).

c. For the third and each subsequent offense, the civil penalty shall be one thousand dollars ($1,000), respectively.

d. The clear proceeds of a civil penalties collected pursuant to this subdivision shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2.

(2) Any employer shall also be liable, in a civil action, for reasonable damages suffered by a defendant as a result of the violation, and a defendant discharged or demoted in violation of this paragraph shall be entitled to be reinstated to his former position. The statute of limitations for actions under this subdivision shall be one year pursuant to G.S. 1-54.

(o) Criminal Penalty for Wrongful Violation by Employer. - An employer that withholds any amount from the disposable income of a defendant, and fails to remit any portion of the amount so withheld as required by this section, is guilty of a Class 1 misdemeanor, provided that the employer shall not be found guilty under this subsection if the employer remits the total amount so withheld promptly after being charged with the misdemeanor."

SECTION 5.3. G.S. 15A-1343(b) is amended by adding a new subdivision to read:

"(9a) If income withholding is ordered under G.S. 1340.39, comply with all the duties of the defendant that are specified in that section."

setoff debt collection of restitution judgments

SECTION 6.1. G.S. 105A-2(2) reads as rewritten:

"(2) Debt. - Any of the following:

a. A sum owed to a claimant agency that has accrued through contract, subrogation, tort, operation of law, or any other legal theory regardless of whether there is an outstanding judgment for the sum.

b. A sum a claimant agency is authorized or required by law to collect, such as child support payments collectible under Title IV, Part D of the Social Security ~~Act.~~Act or restitution collectible under G.S. 15A-1340.40.

c. A sum owed as a result of an intentional program violation or a violation due to inadvertent household error under the Food Stamp Program enabled by Chapter 108A, Article 2, Part 5.

d. Reserved for future codification purposes.

e. A sum owed as a result of having obtained public assistance payments under any of the following programs through an intentional false statement, intentional misrepresentation, intentional failure to disclose a material fact, or inadvertent household error:

1. The Work First Program provided in Article 2 of Chapter 108A of the General Statutes.

2. The State-County Special Assistance for Adults Program enabled by Part 3 of Article 2 of Chapter 108A of the General Statutes.

3. A successor program of one of these programs."

SECTION 6.2. G.S. 105A-13(a) reads as rewritten:

"(a) State Setoff. - To recover the costs incurred by the Department in collecting debts under this Chapter, a collection assistance fee of five dollars ($5.00) is imposed on each debt collected through setoff. The Department must collect this fee as part of the debt and retain it. The collection assistance fee shall not be added to child support debts or debts for restitution collected under G.S. 15A-1340.40, or collected as part of child support ~~debts.~~ debts or of debts for restitution collected pursuant to G.S. 15A-1340.40. Instead, the Department shall retain from collections under Division II of Article 4 of Chapter 105 of the General Statutes the cost of collecting child support debts under this Chapter.

SECTION 6.3. G.S. 15A-1340.38(d) reads as rewritten:

"(d) An appeal of the conviction upon which the order of restitution is based shall stay execution on the judgment and setoff debt collection of the judgment until the appeal is completed. If the conviction is overturned, the judgment shall be cancelled."

SECTION 6.4. G.S. 15A-1340.38 is amended by adding a new subsection to read:

"(e) The court, before entering an order for restitution that is to be docketed as a civil judgment under this section, shall require the defendant to provide the defendant's complete, current and correct social security number or other taxpayer identification number. Failure to comply with this requirement is punishable as a contempt of court. The defendant's social security number or other taxpayer identification shall be entered in the records of the court for the purpose of collecting the judgment through setoff debt collection pursuant to G.S. 15A-1340.40."

SECTION 6.5. G.S. Article 81C of Chapter 15A of the General Statutes is amended by adding a new section to read:

"§ 15A-1340.40 Setoff debt collection.

(a) The Administrative Office of the Courts, as a claimant agency under Chapter 105A of the General Statutes, is authorized to collect the amount of each restitution judgment docketed pursuant to G.S. 15A-1340.38, though use of the setoff debt collection procedures specified in that Chapter, subject to the following conditions:

(b) The Administrative Office of the Courts shall initiate setoff debt collection to collect each restitution judgment upon the later of the following:

(1) If the defendant, upon conviction, is sentenced to an active sentence, immediately upon entry of the judgment imposing the sentence,

(2) If the defendant, upon conviction, is placed in probation, whether supervised or unsupervised, immediately upon revocation or termination of the probation or expiration of the probation term.

(c) The total amount of each restitution judgment, less all payments credited against the judgment from other sources, shall be collectible though setoff debt collection.

(d) The total amount collected from each defendant through setoff debt collection shall be credited against all judgments for attorneys' fees docketed against the defendant under G.S. 7A-455 and for restitution docketed against the defendant under G.S. 15A-1340.38, in the order in which the judgments were docketed pursuant to G.S. 1-234.

(e) The Administrative Office of the Courts shall disburse all amounts collected on each restitution judgment directly to the victim named in the judgment and shall immediately notify the clerk of superior court of the county in which the judgment is docketed of the full amount so disbursed. The clerk shall then enter the amount so disbursed in full or partial satisfaction of the restitution judgment.

(f) For each restitution judgment, setoff debt collection shall continue until the earliest of the following:

(1) The date upon which the judgment is fully paid and satisfied,

(2) The date upon which the judgment becomes unenforceable under G.S. 1-306.

(g) Neither a clerk of superior court, nor the Administrative Office of the Courts, nor the State of North Carolina, nor any officer or employee of any of them, shall be liable to any person for any error or omission made in carrying out setoff debt collection pursuant to this section."

SECTION 6.6. The Administrative Office of the Courts shall, as promptly as is reasonably possible considering its available technology resources and the other demands on their use, adapt its current setoff debt collection technology so that it is also able to collect restitution pursuant to this section. This section shall become effective as of the date on which the Administrative Office of the Courts certifies in writing to the Joint Committee on Governmental Operations that it has done so and shall apply to all restitution judgments docketed on and after that date.

SECTION 6.7. There is appropriated to the Judicial Department in the current operating budget for the 2005-2007 biennium an amount sufficient to cover all costs to be incurred in implementing the setoff debt collection of restitution under this section.

SECTION 6.8. There is appropriated to the Office of Indigent Defense Services in the current operations budget for the 2005-2007 biennium an amount sufficient to compensate it for the amount that is currently being collected through setoff debt collection on attorneys' fee judgments, and that will be transferred to restitution judgments as a result of the enactment of this section.

aoc study on third-party collection

SECTION 7. The Administrative Office of the Courts shall study the use of third-party collection as a means to improve the collection of restitution and other court fines, fees, and costs. The Administrative Office of the Courts shall report its findings and recommendations to the 2006 Regular Session of the 2005 General Assembly upon its convening.

EFFECTIVE DATE

SECTION 8. Sections 7 and 8 of this act become effective when they become law. Sections 6.1 through 6.6 of this act become effective and apply as provided in Section 6.6 of this act. The remainder of this act becomes effective December 1, 2005, and applies to all offenses committed on and after that date.