California Code, Government Code - GOV § 12419.5

The Controller may, in the Controller's discretion, offset any amount due a state agency from a person or entity, against any amount owing that person or entity by any state agency.  The Controller may deduct from the claim, and draw the Controller's warrants for the amounts offset in favor of the respective state agencies to which due, and, for any balance, in favor of the claimant.  Whenever insufficient to offset all amounts due state agencies, the amount available shall be applied in the manner as the Controller, in the Controller's discretion, shall determine.  If, in the discretion of the Controller, the person or entity refuses or neglects to file a claim within a reasonable time, the head of the state agency owing the amount shall file the claim on behalf of that person or entity.  If approved by the Controller, the claim shall have the same force and effect as though filed by that person or entity.  The amount due any person or entity from the state or any agency thereof is the net amount otherwise owing that person or entity after any offset as provided in this section.

For purposes of this section, an amount owing to a person or entity by any state agency shall include any tax refund.

This section shall not apply to payment of online game prizes of ninety-nine dollars ($99) or lower by California State Lottery Retailers pursuant to subdivision (a) of Section 8880.32.