To amend the Internal Revenue Code of 1986 to provide for offsetting certain past-due local tax debts against income tax overpayments.

“(8) Past-due, legally enforceable local tax obligations

“(A) In general—A State may, on behalf of a local government located within the State, submit a notice of past-due, legally enforceable local tax obligation for offset under this subsection.

“(B) Special rules—Such submission and offset shall be made with respect to any past-due, legally enforceable local tax obligation under rules similar to the rules of this subsection, except—

“(i) under paragraph (3)(A), any reduction attributable to a past-due, legally enforceable local tax obligation shall be made (in addition to reductions specified in such subparagraph) after the overpayment is reduced pursuant to—

“(I) this subsection with respect to any past-due, legally enforceable State income tax obligation; and

“(II) subsection (f) with respect to any covered unemployment compensation debt; and

“(ii) the local government on whose behalf a State is submitting shall certify to the State that the requirements of paragraph (4) have been met by the local government.

“(C) Past-due, legally enforceable local tax obligation—For purposes of this subsection, the term past-due, legally enforceable local tax obligation means any debt—

“(i)

“(I) which resulted from a judgment rendered by a court of competent jurisdiction, or a determination after an administrative hearing, which has determined an amount of tax to be due to a local government; and

“(II) which is no longer subject to judicial review; or

“(ii) which resulted from a tax imposed by a local government which has been assessed but not collected, the time for redetermination of which has expired, and which has not been delinquent for more than 10 years.

“(D) Regulations—The Secretary shall issue such regulations, and modify any such regulations under paragraph (6), as may be necessary to carry out the purposes of this paragraph.”