(1) In order to collect delinquent taxes after the time for appeal has expired, the department may direct the offset of tax refunds or other funds due the taxpayer from the state except wages subject to the provisions of 25-13-614, MCA, and retirement benefits that are exempt from execution.

(2) Contract proceeds subject to offset may include wages due the taxpayer. Taxpayers may exclude wages from offset on contract proceeds by submitting a claim to the department within 30 days of notification of the offset. The claim must set forth the amount of wages and include documentation to support the claimed wage exclusion. Should the department dispute the claim, the claim and documentation shall be considered a request for hearing.

(3) Upon determination by the department of a tax refund or other funds owed by the state to a delinquent taxpayer, the department may direct the offset of such funds by serving notification of the offset to the taxpayer.

(a) The department shall provide notice of the right to request a hearing pursuant to the Montana Administrative Procedure Act on the matter of the offset action or the department's intent to file a claim on behalf of a taxpayer.

(b) All tax refunds or other funds subject to offset by the department shall be held pending either the expiration of the 30-day notification period, or the resolution of the taxpayer's hearing, if requested.

(c) The provisions of (3) and (3)(a) also apply to claims for tax refunds submitted on behalf of delinquent taxpayers by the department.

(4) The department may file a claim for state funds on behalf of the delinquent taxpayer if a claim is required before the funds are available for offset.

(5) Claims for tax refunds or other funds which are submitted by the department are based upon a subsequent intent to offset on those funds. Should a hearing be requested by the taxpayer, the issues of such hearing shall be based upon both the claim submitted by the department and the intended offset.

(6) The department may internally issue such offsets or claims upon tax refunds or other funds administered by the department in accordance with the above provisions.

(7) Tax refunds and other funds seized by levy based upon a filed Warrant for Distraint are not subject to the above provisions.