Category Archives: Tax.Collection

The Effects of State Delinquent Tax Collection Outsourcing on Administrative Effectiveness, Efficiency, and Procedural Fairness

Source: Sungkyu Jang, Robert J. Eger,
The American Review of Public Administration, April 6, 2018

Abstract
Since the 1980s, state governments have been using private debt collection agencies as facilitators and expediters in the delinquent tax collection process. The use of private collection agencies incorporates administrative effectiveness, efficiency, and procedural fairness, which can lead to an increase in revenues without affecting either the tax base or rate while protecting taxpayers. Using state-level panel data for the years 2000 to 2011, the administrative effectiveness outcome is that private collectors do not reduce the aggregate delinquent tax inventory, but the administrative efficiency outcome is that private collectors reduce collection cost. For procedural fairness, private collectors have a positive effect on the number of tax appeals filed in a state tax department with a Republican governor; however, they decrease the number of tax appeals filed with an outside-independent tax appeal agency.

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I.R.S. Paid $20 Million to Collect $6.7 Million in Tax Debts

Source: Patricia Cohen, New York Times, January 10, 2018

Private debt collectors cost the Internal Revenue Service $20 million in the last fiscal year, but brought in only $6.7 million in back taxes, the agency’s taxpayer advocate reported Wednesday. That was less than 1 percent of the amount assigned for collection. What’s more, private contractors in some cases were paid 25 percent commissions on collections that the I.R.S. made without their help, according to the annual report by Nina E. Olson, who heads the Taxpayer Advocate Service, an independent office within the I.R.S. While Republicans have been the most vocal proponents of privatizing public services, congressional Democrats are equally responsible for the I.R.S.’s program. Despite the pointed failure of similar efforts in the past, Congress passed a law in 2015 requiring the I.R.S. to use outside contractors to make a dent in the $138 billion that taxpayers owe the government. The outsourcing began last April. Since then, the report stated, “the I.R.S. has implemented the program in a manner that causes excessive financial harm to taxpayers and constitutes an end run around taxpayer rights protections.” …

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I.R.S. Enlists Debt Collectors to Recover Overdue Taxes
Source: Jessica Silver-Greenberg and Stacy Cowley, New York Times, April 20, 2017

The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.  Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors. …

IRS Debt Collection Program May Lead to Confusion, Help Scammers
Source: AJ Walker, NBC Connecticut, February 14, 2017

NBC Connecticut Troubleshooters caught up with officials from the IRS to find out more about their new debt collection program and how they’re going to protect taxpayers from getting scammed. This spring, debt collectors hired by the IRS will start making collection calls to go after money on old tax debts. This could lead to confusion as the fake IRS debt collection scam call is one of the number one scams in the country. In the past, the IRS has repeatedly said they will never call you collect money. Instead, they send a letter. This change could open the door to crooks who might see this as opportunity to reach out to more people using the IRS’s name. It’s too early to gauge how the ongoing phone scam will impact real IRS debt collection call efforts. But people targeted by the scheme say it will be confusing. … The collection program came about because a law called the FAST Act passed in 2015 requiring the Internal Revenue Service to use private debt collectors to go after tax money on older accounts. The money would help pay the FAST Act’s $305 billion price tag to fund transportation and infrastructure. … However, this isn’t the first time the agency has tried to use debt collectors. In 2006 the IRS hired Pioneer, CBE Group and a company called Linebarger Goggan Blair & Sampson to try to collect an additional $1.4 billion in past due taxes. It fired the debt collectors in 2009 saying it wasn’t cost effective to use private collectors and the “work is best done by IRS employees.” … However, one IRS debt collector has recently been accused of not acting in peoples best interest. Pioneer was mentioned in lawsuits filed by the Illinois Attorney General and the Consumer Finance Protection Bureau accusing the business and its parent company Navient of taking advantage of borrowers. …

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Ige appoints new director for troubled state tax department

Source: Kevin Dayton, Honolulu Star Advertiser, December 6, 2017
 
Gov. David Ige today named Linda Chu Takayama as the new director of the state Department of Taxation in an effort to quickly replace outgoing director Maria Zielinski in what has emerged as a pivotal position in Ige’s administration.  Takayama is a lawyer who now serves as Ige’s director of the state Department of Labor and Industrial Relations, and previously served as state insurance commissioner. Zielinski abruptly resigned effective Tuesday in the wake of a report that revealed state tax officials instructed a supposedly independent consultant on which subjects it should address in its monitoring reports on the progress of a new $60 million tax computer system. … Ige is under intense pressure to efficiently execute the $60 million contract to replace the tax department’s old computer system. State government has had an embarrassing history of botched computer projects dating back to previous administrations, and the computer system for collecting state taxes is a critical piece of state infrastructure.  The project has already stirred controversy. Randy Perreira, executive director of the Hawaii Government Employees Association, wrote to Gov. David Ige on Oct. 31 to object to the decision to take control of the project away from Zielinski and TSM Program Manager Robert Su earlier this year. …

KOSE demands active shooter training following shooting at Dept of Revenue office

Source: Devon Fasibnder, KWCH, October 5, 2017
 
The Kansas Organization of State Employees is demanding active shooter training for all state employees following the shooting of Cortney Holloway at the Wichita Department of Revenue office.  The letter, written by KOSE President Lisa Ochs, demands a security review of all state government buildings, public or privately owned, to ensure all employees are protected.  “Sadly, all indications are that the private building that houses the Department of Revenue offices where Cortney Holloway was shot lacked security measures that might have prevented this incident,” the letter reads. … Though the shooting at the Department of Revenue office happened less than a month ago, the KOSE Union writes, “Long before this incident, state employees have felt vulnerable and KOSE members have complained to management that they fear for their safety. Nothing was done. Something must be done now.” …

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Privatization Moved State Workers to Unsecured Office
Source: Associated Press, September 21, 2017
 
The head of Kansas’ state employees union and a local lawmaker say a push by Gov. Sam Brownback’s administration to privatize state office space left employees vulnerable during a shooting this week at a Department of Revenue office in Wichita.  The workers were moved three years ago out of the now-vacant Finney Office building, which had guards and security, to a strip mall office that provided no security, The Wichita Eagle reported. On Tuesday, tax compliance officer Cortney Holloway was shot. … Robert Choromanski, executive director of the Kansas Organization of State Employees, said the larger Finney building with armed guards likely would have deterred a shooting.  …

Privatization moved state workers to unsecured office where shooting occurred
Source: Dion Lefler, Wichita Eagle, September 20, 2017
 
Workers at the Wichita tax office where an employee was shot Tuesday were moved out of a secured state office building into an unsecured storefront about three years ago, as part of Gov. Sam Brownback’s program of privatizing office space.  A state senator and the head of the state employee union said they think Tuesday’s shooting probably would have been avoided had the Department of Revenue tax office still been housed in the now-vacant Finney State Office Building downtown instead of a strip mall at 21st and Amidon. … “I’m sure they would have been more secured at the Finney State Office Building,” said Robert Choromanski, executive director of the Kansas Organization of State Employees. “There were guards, there was protection.”  He said there was no protection Tuesday when tax compliance agent Cortney Holloway was shot at the Revenue Department office. …

Don’t mess with RITA in Niles recovery plan

Source: The Vindicator, July 31, 2017
 
Last week, the Niles Financial Planning and Supervision Commission, the state-appointed panel overseeing the city’s recovery, put its stamp of approval on the seventh rendition of a plan authored by Mayor Thomas Scarnecchia and approved by city council. It lays out a road map for cost-cutting and capital improvements for the beleaguered city of 19,000 people over the next five years.  Among its more noteworthy features include implementation of two $5 license-plate fees to generate about $180,000 a year, borrowing of $1.6 million to make critically needed improvements to crumbling city buildings and dismantling the city’s income-tax department.  That latter move to outsource most income-tax functions of city government to the Regional Income Tax Agency operated in connection with the Council of Regional Governments has ignited a firestorm of opposition from some within city government, most notably the leadership of the American Federation of State, County and Municipal Employees Local 506 in the city. …

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Niles deciding whether to outsource income tax collection
Source: Stan Boney, WKBN, July 14, 2017
 
It appears Niles will have a five-year plan — which includes outsourcing income tax collection to an agency outside of the city — to get out of fiscal emergency. But not everyone agrees with it.  The plan would replace the Niles Income Tax Department with the Regional Income Tax Agency, known as RITA. … Bob Ward, president of the AFSCME Local 506 — a union representing the income tax workers, said he’s not in agreement with it.  He showed WKBN a grievance from 2016 — which the union won — preventing RITA from taking over.  Ward said they’ll file another grievance if need be. …

Union fights push to hire private tax collectors

Source: Associated Press, April 15, 2014

A public employees union is fighting a bipartisan effort in Congress to force the Internal Revenue Service to hire private contractors to collect some delinquent taxes. The IRS stopped using private tax collectors in 2009 after determining that agency employees could do a better job. The National Treasury Employees Union said the program failed in the past and should not be forced on the IRS. … The Senate Finance Committee passed a bill two weeks ago that included an amendment requiring the IRS to revive the program. The amendment was offered by Sen. Chuck Schumer, D-N.Y. It was accepted without opposition….

New Jersey town takes the taxing out of tax collection

Source: John Breeden II, GCN, December 20, 2013

…If enough residents don’t pay their taxes or their municipal bills, it can strangle a small government. Municipalities do have some tried and true ways to recoup those fees, including the auction of tax liens, where investors can purchase county-held tax certificates representing unpaid taxes and fees. But setting up an auction of thousands of liens is time consuming and expensive for small governments. Plus, live auctions further delay the payment of delinquent taxes and fees. Moving the process online can greatly reduce administrative costs, increases the pool of bidders, and can help local governments more quickly recoup taxes and fees. …

… To combat the overhead involved in the in-person auctions, Red Bank contracted with Realauction.com to move the entire process online. Realauction.com is a seven-year-old company that is currently working in Florida, New Jersey, Maryland, Colorado and Arizona and the cities of Detroit and Chicago. In New Jersey, Red Bank was the first municipality to come onboard, but now many others are joining up. …

…Realauction.com has developed software to meet the needs of specific counties. One program automates the creation of a notice of sale for foreclosed properties. Another calculates the amount due on each tax lien, tracks payments electronically and notifies the municipality when funds have settled. The system processes receipts, notifications and title orders on hundreds of tax liens simultaneously, the company said, accomplishing these tasks in a matter of hours rather than days. Crum said that security is not a big problem because the documents are public records. However, bidders’ information like their Social Security numbers pass through a one-way gateway to the website during sign up and are kept in an encrypted vault that can’t be accessed remotely. …

Firm says home rule may be a cost-saving measure for Cumberland County

Source: Christen Croley, Sentinel, November 14, 2013

…Among the recommendations Public Financial Management unveiled Wednesday during a Cumberland County finance meeting was the idea the county could move to a home rule charter style of government. PFM consultant Gordon Mann said home rule allows the county flexibility to eliminate duplicate services, cut costs and reorganize without violating county code….

…In another of its recommendations, PFM lead consultant Dean Kaplan advised commissioners to consider “managed competition” for applicable services, including building security, facility cleaning, prisoner transportation and delinquent property tax collection….

Portsmouth Resident Working to Find Ways Communities Can Share Services

Source: Sandy McGee, Portsmouth Patch, April 7, 2013

The Joint Commission on Shared Municipal Services has appointed two advisory committees to support its first steps toward helping cities and towns cut costs by working together to provide municipal services. The commission…has announced the appointment of a Public Safety Dispatch Service Advisory Committee and a Tax Collection Service Advisory Committee, since public safety dispatch and tax collection were among the services that legislators have identified as having the greatest potential for sharing and saving money for municipalities.

Florida backs off license tag fight

Source: Brittany Alana Davis, Tampa Bay Times, December 8, 2012

Backing away from a possible court fight, the Florida Department of Highway Safety and Motor Vehicles announced Friday that it will halt its attempt to bid license tag services to private vendors.

Tax collectors — who distribute state tags — and two manufacturing groups tried to block the change by lobbying elected officials and filing legal action against the department.

Highway Safety Chief Julie Jones had wanted to save money by paying private companies $31.4 million over two years to make tags and distribute mail and online orders, but she abandoned the idea under pressure from Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater, among others….