North Carolina Department of Revenue Collection Strategy

Transcription

1 North Carolina Department of Revenue Collection Strategy

2 C o l l e c t i o n S t r a t e g y P a g e 2 Table of Contents Table of Contents... 2 Overview... 3 Trends... 3 Account Stratification... 5 Case Actions... 6 Recoveries... 7 Process Levers... 8 New Tactics for Consideration Goals for Management Vision Collection Process Guiding Principles Tactics and Tools New-TIMS Tactics and Tools Key Strategies Large Case Accounts Receivable Field Offices Accounts Receivable Centralized Accounts Receivable Interstate Accounts Receivable Non-Filed Business Tax Returns Accounts in Bankruptcy Miscellaneous Accounts Receivable... 31

3 Jul Sep Nov Jan Mar May July Sept Nov Jan Mar May July Sept Nov Jan Mar May C o l l e c t i o n S t r a t e g y P a g e 3 Overview The Collection Division for the North Carolina Department of Revenue is pleased to present its Collection Strategy for fiscal year To a large degree, effective accounts receivable management involves segmentation. Breaking different types of receivables down into groupings of similar cases allows the Department to prioritize work and determine the most effective and efficient approach for recovery. The Department has segregated its receivable into seven major categories. This document provides those major categories and details strategies that are applied towards each. In addition to our current approach, we are continuing to work on the methods that we will implement in TIMS. The Collection Case Management System (CCM) powered by CGI s CACS-G collection system, with more than 200 extensions requested by the Department, promises to revolutionize how we collect tax in North Carolina. In addition to the current strategies, this document also includes planned strategies that will be implemented in CCM. Trends As seen in this graph, the Department s accounts receivable continues to remain high and is trending upward. $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 AR Balance July 1, June 30, 2012 The accounts receivable is a rolling number. As existing debts are resolved, new cases are added. Payment plans, attachment and garnishments, and other collection methods often take time to resolve debts, so recoveries normally lag behind additions. The next chart shows additions and reductions to the receivable.

4 C o l l e c t i o n S t r a t e g y P a g e 4 AR Additions/ Reductions $1,700 $1,500 $1,300 $1,219 $1,228 $1,507 $1,447 $1,100 $900 $700 $750 $652 $913 $1,025 Total Additions Total Reductions $500 $ Additions to the receivable have trended high since Certainly economic conditions facing the State have caused new delinquencies during the past several years. Additionally, the Examinations Division has and continues to ramp up its efforts to discover areas of non-compliance, particularly those involving non-filed individual income taxes. During , the Department saw a sharp increase in additions to the receivable as DTax and newer auditing tools began to come on-line. Additionally, in late 2010, we implemented the Write-off review and reversal program. Through this automated program, the Department reviews previously written off accounts for new assets and reactivates any accounts and issues levy orders where assets are discovered. This program has added over $161 Million to the receivable by reactivating previously written off accounts. During 2010, we began making changes to adapt to the dramatic rise we were seeing in the additions to the receivable. As these changes have taken effect, the gap between additions and reductions has narrowed. These changes include: Auto Attachment (AA): Completely automated process for matching taxpayers with assets such as employers or financial institution accounts and then issuing attachments and garnishments. Predictive Dialer Call Campaign: Prior to sending cases through the AA process, the Department attempts to call taxpayers by telephone. State Vendor Attachment: All payments issued to state vendors through the North Carolina Accounting System (NCAS) are screened by the Department using a nightly batch process prior to issuance. Any payments being issued to companies owing state tax are offset to the tax debt. Financial Institutions Records Match (FIRM): Legislation passed in 2010 and implemented in early 2012 allows the Department to send records of debtor taxpayers to financial institutions. The financial institutions are required to inform the Department of any taxpayers having an

5 C o l l e c t i o n S t r a t e g y P a g e 5 account at that institution. Through this program, we now have at least one relationship with a financial institution identified for 72% of debtor taxpayers. Large Case Unit: Cases with a value of $50,000 or greater involve some of our most complex and difficult tax and collection issues. Resolution of these cases can have a material impact on the receivable. In 2011 the Division established a small team of experts to specialize in the resolution of these highest priority cases. Interstate Collection Unit: North Carolina General Statutes give the Department many tools for collecting past-due taxes in state. However, those tools do not apply outside the State of North Carolina. In 2010 the Department established a team to specialize in complexities of working foreign accounts. We believe these changes have had a positive impact on our ability to handle the escalation in the growth of additions to the receivable. As we move into the TIMS environment and employ CCM, we look forward to further improvements in the process. Account Stratification The collection process is broken down into seven areas, each with its own collection strategy. In determining the stratifications, we looked at a number of different issues and statistics. Individual income tax makes up 68% of the Department s accounts receivable while business taxes comprise the remaining 32%. Individual income tax cases can be most cost effectively worked using a centralized approach using automated collection actions and semi-professional telecollectors assigned to the central collection unit. As the average dollar amount increases, the complexity of the cases increase as does the risk associated with non-payment. Cases above $15,000 are assigned to geographic territories for the Division s 12 field office. Individual Income Tax Dollar Range Number of Dollar Amount Taxpayers Owed Strategy <$100 28,166 $1.6 Million Centralized $100 - $15, ,152 $468 Million Centralized $15,000 - $50,000 6,203 $153 Million Field Offices > $50,000 1,026 $113 Million Large Case Since 2011, cases above $50,000, regardless of tax type have been referred to the Large Case Unit. Large Case Unit employees are among the highest skilled collection professionals in the Division. Large cases often involve large corporations and individuals with complex tax and collection issues. The Unit is responsible for ensuring these high risk cases are resolved quickly and accurately. Assigning business tax cases to local field offices is the most effective method for handling these accounts. This is due to the more frequent filing requirements for business tax reports and returns and

6 C o l l e c t i o n S t r a t e g y P a g e 6 the fact that most of these taxes are collected by the business then held in trust for the State. Field office staff work closely with local businesses to enforce compliance. Both non-filed business tax returns and business tax accounts receivables are referred to the field, regardless of the amount owed. In 2010, we added a new strategy for handling accounts where the taxpayer is located outside the State of North Carolina. At the end of the fiscal year, 6,166 taxpayers located outside of North Carolina owed $30.3 Million. Inside the State, the Department has many methods to enforce collection of NC tax debts. However, laws in other states differ and civil collection methods initiated by the Department are ineffective. The Interstate Collection Unit Manager is tasked with working with the Attorney General s office to seek representation in local jurisdictions across the country and collect these debts using local laws. Revenue officers in the Unit are responsible for working with interstate based taxpayers to secure payment. If the taxpayer is unwilling to pay, the revenue officers prepare the case for referral to the attorney. Debtors under the protection of the US Bankruptcy Courts present a challenge to all collection organizations. We continue to work to recover the debts or otherwise resolve the cases, but collection methods for these accounts are based in the US Bankruptcy Code rather than on North Carolina law. The Department s Bankruptcy Unit specializes in handling of the accounts. As we begin the fiscal year, 12,640 taxpayers are under bankruptcy protection accounting for $41.2 million in tax liability. Case Actions To evaluate the effectiveness of the program, it is important to see what actions are being taken to resolve cases. The table below indicates the status of cases as of the end of the fiscal year. Accounts Receivable Activity $112, 10% Active Legal Actions Bankruptcy/Hold $187, 18% $312, 29% Open Payment Agreements $203, 19% $203, 19% $57, 5% Pending Automated Legal Actions Values in $ Millions Uncollectible/Account Adjustment Active Legal Actions: Some form of legal action such as attachment and garnishment, tax warrant, etc. is in progress against 29% of the receivable; Bankruptcy/Hold: Collection is in abeyance for 5% of the receivable, primarily due to bankruptcy filings;

7 C o l l e c t i o n S t r a t e g y P a g e 7 Open: This is the portion of the receivable that the Department is actively working to resolve. No action is in place to recover 19% of the receivable and personnel are calling, writing letters, trying to discover assets for levy and otherwise working these accounts; Payment Plans: 19% of the receivable is under an active installment payment plan; Pending Automated Legal Actions: 18% of the receivable is in a queue for the Automated Attachment program. Lower priority accounts are sent through the process every 90-days as new assets are loaded into the system s database. Uncollectible/Account Adjustment: 10% of the receivable has been deemed uncollectible. Recoveries During , the Department added $1.5 billion to the receivables and reduced it by $1.4 billion as indicated in the following table: Beginning Balance (July 1, 2011) $ 1,048,057,862 Annual Additions $ 1,508,589,589 Total ARs Available $ 2,556,647,451 Less Reductions $ 1,448,128,353 Ending Balance (June 30, 2012) $ 1,108,519,098 The reductions of $1.4 billion included $434 million in collections as indicated by the table below: Account Receivable Collections $ 434,482,018 Non-filed Business Tax Return Collections $ 58,572,179 Total Collections $ 493,054,197 $58.5 million was recovered by collection of non-filed business tax returns which are not considered a part of the accounts receivable. The remaining $674 Million in reductions came from account adjustments, penalty waivers, write-offs, etc.

8 C o l l e c t i o n S t r a t e g y P a g e 8 Process Levers There are several things we can change to impact the speed of case resolution. However, there are significant issues associated with each of these levers. Process Lever Positive Impact Negative Impact Increase Number of cases moving through Auto Attachment (AA) Change business rules that control AA asset selection Installment payment plan terms Currently the Department throttles the number of cases to an average of 17,500 per week. We can increase the cap or remove it completely. This would result in more attachments and garnishments issued weekly. Currently we look for wage assets first for individual income tax accounts $7,000 and below. We look for a financial institution asset first for all business entities and for income tax accounts above $7,000. Since statute limits wage garnishments to 10%, the time for liquidation of the account is often much longer than for a financial institution attachment and garnishment which levy 100% of the account. Reducing this threshold or eliminating it would expedite collection. The Department currently has standard payment plan terms which allow as much as 2 years for repayment of tax liabilities with few questions asked. We can reduce our standard terms to expedite collection or require any payment plan to be justified by the taxpayer using financial statements. Inability of DOR staff and telephony systems to handle resulting call volumes; Complaints from taxpayers/representatives not able to reach NCDOR staff; Complaints from large employers and financial institutions about handing increased volumes. Financial institution attachments have a more immediate impact on taxpayers; Financial institution attachment generate significantly more inbound calls than wage garnishments; Financial institution attachment generate significantly more complaints than wage garnishments. Complaints from employers/representatives will increase due to more assertive payment plan terms; Removing standardized terms adds time to negotiating agreements therefore call agents accept less calls; All employees negotiating payment plans have not been trained in financial statement analysis.

9 C o l l e c t i o n S t r a t e g y P a g e 9 Process Lever Positive Impact Negative Impact Converting attachments and garnishments to pay plans Eliminate programs such as Small Business Relief program and Individual Income Tax Debt Relief Program Loosen offer-incompromise terms to make more taxpayers eligible for OICs Depending on the taxpayer s history, in most instances employees are authorized to withdraw attachments and garnishments if the taxpayer requests conversion to an installment payment plan. Since attachments and garnishments are administered by a 3 rd party, collection is more reliable than through a payment plan. The Department could hold more or all attachments and garnishments, allowing fewer or no conversions. These programs have been very popular and have allowed taxpayers to take steps to avoid penalties and collection fees. In the case of the Small Business Program, it has also saved businesses by offering counseling to small business owners. However, extended payment plans allowed by the programs have slowed resolution of the cases. Eliminating current programs and not instituting new ones may expedite resolution of cases. Currently the Department uses a standard formula to process offers-incompromise (OIC). The formula establishes a reasonable collection potential (RCP) for the debt and documents findings for acceptance of an offer as required by statute. The Department could change the formula in order to accept more OICs or eliminate it entirely. More taxpayer complaints; Telephone conversations will be longer as agents explain the Department s position and listen to complaints, resulting in fewer calls per agent per day. Elimination of the Small Business Relief program may cause some viable businesses to fail; Taxpayer complaints will increase as the Department becomes more assertive at closing businesses; Since the programs are popular, elimination will generate concern/complaints. Loosening the RCP calculation may violate statute; By making more taxpayers eligible for OICs, overall collections may be reduced.

10 C o l l e c t i o n S t r a t e g y P a g e 10 New Tactics for Consideration There are several things we could do to enhance compliance that would require additional technical infrastructure or legislation: Tactic Description Current Implementation Barriers Outsourcing The Department could outsource segments of the receivable to private collection agencies (PCAs). Suggested segments might include low dollar cases, cases deemed uncollectible, cases in the pending automated legal action status, and certain foreign cases. Outsourcing of in-state accounts will require statutory changes. Outsourcing is not in scope for CCM. Funding for a change order would be required to implement this module in CCM. Since this involves significant technical changes, we would prefer to wait until R5 implementation to contract with PCAs. Additional FIRM partners Require State Issued Licenses and Permits to be subject to a tax compliance check. With only 15 Financial Institution (FI) data exchanges, the Department has a record of a banking relationship with 72% of debtor taxpayers. There are approximately 200 FIs covered by the FIRM legislation. By increasing the number of FIs reporting, the Department would have much more information on which to base financial institution attachments. A number of states now require business professional licenses, ABC permits, license plate renews, driver s license renewals, hunting and fishing licenses, etc. to be subject to tax compliance checks. The license is not granted if the taxpayer owes delinquent taxes. Limitations are due to current IT infrastructure. Expediting IT changes would enable the Department to issue more financial institution attachment. This requires legislation; The Department has unsuccessfully pursued legislation several times in the past. Some state agencies are resistant to the idea; The licensing/permitting agencies must gather and store identifying information, such as FID or SSN that can be used in data matching processes.

11 C o l l e c t i o n S t r a t e g y P a g e 11 Sale of Real Property Currently NCDOR personnel are allowed to levy and sale personal property. However, we must rely on the 100 Sheriffs offices to sell real property. Our results in selling real property have been mixed, so we rarely levy real property. By allowing NCDOR personnel to levy and sell real property, we would be able to maximize value received for the property and ensure a consistent approach statewide. Would require legislation; Legislation has been opposed by the NC Sheriffs Association; The Department has unsuccessfully sought legislation for this in the past.

12 C o l l e c t i o n S t r a t e g y P a g e 12 Goals for Maintain or exceed return on investment of $44.44; Collections Goal: $500 million; Minimize the age of the receivable; 70% of the receivable should be under 2 years old; Minimize cases in Open status to 20% or less. Minimize taxpayer complaints of verified NCDOR mistakes or wrong-doing in the collection process to 1% or less.

13 C o l l e c t i o n S t r a t e g y P a g e 13 Management Vision 1. The NCDOR Collection Division is comprised of the Best, Brightest, Most Professional, Can-do People in State Government. The Collection Division and its personnel are perceived by others as responsive, hard working, professional, and always up to a challenge. Agency management believes, If you want something done right, give it to the Collection Division. Even if it s outside their normal scope of work, they will bring home a touchdown every time. 2. The NCDOR Collection Division is an Important Part of NC State Government and Provides Valuable Services to NC s Citizens. Taxpayers, their representatives, and other stakeholders such as Legislators perceive the Division and its employees as a valuable part of State Government. The Division is effective and efficient in enforcing the Revenue laws of North Carolina. We are proactive, using all tools available to us under the statutes to collect un-paid, but legally due taxes. Our guiding philosophy is We want to ensure every dime due to the State under the law is collected but we do not want to collect one dime that is not due by law. Members of our workforce are experts in NC tax law and are able to evaluate taxpayer concerns about their liability. If our staff finds that assessed liability is not owed, they will make appropriate adjustments to the account. Taxpayers should feel that the Division s agents treated them fairly and with respect, even if they did not like the outcome of a particular action involving their case. This is simply not possible in every case due to taxpayers attitudes and unwillingness to accept responsibility for their actions. But in every case, we want outside observers to recognize that the taxpayer was dealt with consistently and respectfully. 3. The NCDOR Collection Division is an Employer of Choice. The Collection Division is the best place to work in the best Agency in NC State Government. Our personnel should believe that if they work hard and do the right things, they will be supported and their careers will be enhanced. We would like to retain our outstanding employees that have options to go into higher paying jobs in other divisions, agencies, or companies because they like their work, believe in their work, and appreciate their management. We would like to have employees of other divisions wanting to be a part of what we are accomplishing as a Division.

14 C o l l e c t i o n S t r a t e g y P a g e 14 Division management solicits input and feedback from employees within the Division. Management respects the thoughts, opinions, and expertise of our workforce, including our eldest statesmen, our greenest trainees, and everyone in between. We also want hard working employees to understand that we will not ask them to shoulder the burden for those that do not perform. We hold ourselves accountable for our performance and conduct. But all employees should have confidence that they will always be treated fairly and with respect. Even most terminations should end with a handshake and a smile, with the former employee able to retain his or her personal dignity. 4. North Carolina s Tax Collection Program is a National Model for its Effectiveness. Our sister states, the Federal Government and the private sector will view our program as a model for effective tax administration and enforcement. We want our Divisional leadership to be regarded as national leaders in the State Delinquent Tax Collection area.

15 C o l l e c t i o n S t r a t e g y P a g e 15 Collection Process Guiding Principles 1. Cost Effective Treatment Streams Prioritize cases and move though collection process based on the debtor s Risk and the potential Yield of case Enhance cost effectiveness and reduce complaints 2. Be Easy To Do Business With Maximize payment options Treat all taxpayers with dignity and respect 3. Maximize Data and Information Available About Debtors Governmental Sources Private Data Free Web-sites 4. Effective Goal Setting and Management Reporting Set SMART (Specific, Measurable, Attainable, Relevant, Time-bound) Goals Evaluate performance of personnel and processes against goals Employee goals and evaluations should tie back to overall process goals

16 C o l l e c t i o n S t r a t e g y P a g e 16 Tactics and Tools Attachment and Garnishment Automated Attachment Bankruptcy Central Repository Certificate of Tax Liability Criminal Prosecution Data Exchange Federal Income Tax Refund Offset (TOPs) Intangible property that belongs to a taxpayer is subject to attachment and garnishment in payment of a tax. This includes bank deposits, rent, salaries, wages, property held in the Escheat Fund and any other property incapable of manual levy or delivery. An automated process based on business rules that matches taxpayers and their assets and issues a wage, non-wage or financial institution attachment and garnishment. The Bankruptcy Unit is responsible for stopping legal actions and notifying appropriate divisions upon receiving notification of bankruptcy filing, dismissal and or discharge. The Bankruptcy Unit files proof of claims and monitors court ordered payment agreements for debts owed to the Department. The unit works with the Attorney General s office to defend contested proofs of claim in court and to petition for dismissal against taxpayers failing to follow repayment plans established by the court. Unit personnel make adjustments to debts discharged by the courts. They also return debts not discharged to active collections once the court s stay is lifted. A database of assets owned by taxpayers used for issuing attachment and garnishments for automated attachment process and manually issuing attachment and garnishments. Sources include; ESC wage records, New Hire wage records, financial institution account information from State and Federal income tax direct deposits, financial institution account data from internal sources such as OFP and payment agreements as well as FIRM data and Federal Levy Extract data such as W-2, 1099, K-1. The Department records a Certificate of Tax Liability (CTL) at the Clerk of Superior Court. The tax stated on a Certificate of Tax Liability is a lien on real and personal property from the date the CTL is recorded. The CTL protects the State s interest for up to 10 years. The Department may issue a Writ of Execution to levy and sale property encumbered by the CTL. In certain circumstances, the Division may take criminal action to get a taxpayer to file and/or pay taxes. The employee will issue a criminal warrant for misdemeanor failure to file or failure to pay. Felony cases are handled by the Department s Tax Enforcement Division. Data is exchanged between NCDOR and various public and private entities to support the collection process: Beacon, ESC, DHHS, IRS, CPS, Financial Institutions, NCEL, Lexis Nexis, OSC, SOS, US Bankruptcy Courts An automated process based on business rules that send qualified taxpayers and the amount of state tax debt to the IRS to be matched against federal income tax returns with a refund for offset against the state tax debt.

17 C o l l e c t i o n S t r a t e g y P a g e 17 Financial Institutions Records Match (FIRM) Installment Payment Agreements Levy Program Lottery Offset Program Offer in Compromise Predictive Dialer Proof of Claim Selected Case Inventory (SCI) Report Database Skip Tracing The Department submits to financial institutions an electronic list of qualified taxpayers on a quarterly basis. The financial institution is required to reply indicating if the taxpayer has an account. The Department uses the results in the Automated Attachment process to issue an attachment and garnishment. Payment in full is expected at the time a North Carolina State tax return is filed or a liability is discovered by the Department and assessed. The Department will negotiate installment payment agreements based on financial need that allows taxpayers to repay tax debt over a period of time. In some situations, the Department establishes payment plans without any review of financial condition for short-term agreements involving small amounts of debt. For longer-term agreements, agreements involving large amounts of liability, or when a taxpayer with a history of non-compliance is the subject of the agreement, the Department requires financial statements and supporting documentation. A review of the taxpayer s financial condition is performed to validate financial need for the payment plan. The Department may issue a warrant to any revenue officer or other employee of the Department charged with the duty to collect taxes, commanding the officer or employee to levy upon and sell the taxpayer's personal property found within the State for the payment of the tax. The Department provides a list of qualified taxpayers to the North Carolina Education Lottery to offset lottery winnings against state tax debts. The Secretary may compromise a taxpayer's liability for a tax that is collectible under G.S when the Secretary determines that the compromise is in the best interest of the State. The Department uses a predictive dialer to make call campaigns for delinquent taxpayers. Various call campaign strategies are used based on business rules. A document filed with a division of a court that indicates how much a taxpayer owes to the State. Proofs of claim are issued to Federal bankruptcy courts to protect the state s interest after a taxpayer files for bankruptcy protection. Proofs of claim are also issued to Clerks of Superior Court in regards to estates of decedents that owe tax debts. Prioritized work list and reports of collection and delinquent taxpayers. Includes employee performance reports and divisional performance statistics. The Department uses a skip tracing vendor to locate taxpayers, telephone numbers as well as additional information the vendor has to locate the taxpayer or his assets.

18 C o l l e c t i o n S t r a t e g y P a g e 18 Special Assessments Special Projects State Refund Offset Suspension of Corporate Charter Tax Debtor List Tax Warrant Vendor Offset Write-off Write-off Reversal Program The Department has the authority to issue assessments against taxpayers for failure to file a return, pay a tax or trying to avoid payment of a duly assessed tax. The following types of assessments are issued by the Collection Division - Deputy, Jeopardy, non-compliant Garnishee, Successor, Transferee, Responsible Person. The Offer-in-compromise and Special Projects Unit is responsible for more than just evaluating OICs. The unit is also responsible for piloting new projects and procedures. Members of this team have lead special initiatives such as the Fast Tracked Collection Initiatives and FIRM implementation. New business units such as the Large Case Team were concept tested within the unit. An automated process based on business rules that captures an individual income tax refund and applies to qualified tax debt. Taxpayers identified as eligible to have their corporate charters suspended are sent to SOS to process and suspend on behalf of North Carolina Department of Revenue (DOR). The Department publishes the names of individuals and businesses that owe delinquent taxes to North Carolina on the Department s website. The Department has attempted to collect the tax debt listed by using all lawful means available to the agency. The Department may issue a warrant directing the Sheriff of any county of the State to levy upon and sell the real and personal property of the taxpayer. Prior to issuing vendor payments, the Office of the State Controller (OSC) submits the payment information to the Department for potential offset against state tax debts. Matched records are returned to OSC and the vendor payment is then remitted to DOR to be applied to the tax debt. A liability write-off is an accounting transaction that is used to properly reflect the collectability of an account. Accounts deemed by the Department as uncollectible are written off. Additionally, accounts with an amount due below the expected cost of collection may be written off. The purpose of the write-off is to maintain only those accounts in the receivable that the Department expects to collect. An automated process that matches taxpayers with written off debts to the assets used in the Automated Attachment Process. Upon a successful match, the written off debt is reversed and an attachment and garnishment issued.

19 C o l l e c t i o n S t r a t e g y P a g e 19 Automated Assessment of Non-Filed Business Taxes egarnishment Garnishee Web Portal Internet Installment Payment Agreements Letters Portable Case Management Reports Risk/Yield Scoring State Agency Vendor Assets New-TIMS Tactics and Tools The Department will have the option to assess non-filed business tax returns using an automated process. We plan to initially use this feature for low-dollar, high volume quarterly sales tax non-fliers. As we prove the process effective, additional tax types and filing periods will be considered. This process allows the Department to more fully automate collection of these low priority accounts. Electronic issuance and release of wage, non-wage and financial institution attachment and garnishments will be implemented in CCM. A web portal that allows garnishees to maintain state tax attachment and garnishments will be deployed in CCM. Garnishees can notify the Department if an employee is no longer employed, who their current employer is if known, and/or submit payments. If the employee is no longer employed, the automated attachment will immediately look for another asset for attachment and garnishment. Taxpayers will be allowed to enter into installment payment agreements on the Department s internet website. Terms of the agreement will be based on the amount of the debt and the risk/yield score. Automated letters are generated based on business rules to follow up on installment agreements, attachment and garnishments and when certain activities have occurred such as bankruptcy dismissal, release from active military combat zones, re-entry into collections after a natural disaster, etc. A portable case management application will be available in CCM. This application will allow employees to download specific taxpayers and their case data onto their laptop for complete service when visiting taxpayers without the need for an internet connection. The employee will have all necessary data and will be able to take certain actions remotely. Advanced reports such as decision effectiveness, leading edge, correspondence effectiveness and more accurate employee performance will be provided. Decision analytics will be implemented in CCM. Taxpayers will be scored using historical data allowing the department to apply different collection strategies. Taxpayers with high, medium and low scores will be routed to different treatment streams for various collection activities. Various State agencies (UNC System, NCDOT) have agreed to provide a vendor list to the Department on a specified frequency. These records will be used for automated or manual issuance of non-wage attachment and garnishments.

20 C o l l e c t i o n S t r a t e g y P a g e 20 Key Strategies Large Case Accounts Receivable Segment Description Collection Strategy Current State Taxpayers owing a total of $50,000 or more All tax types Cases are referred to the Large Case Team. This is a virtual team consisting of 6 Revenue Officer IIs, a Revenue Office Manager and an Information Processing Technician. This team consists of our most highly trained and experienced staff. The focus of the Large Case Team is to reduce the Department s most complex and largest dollar accounts receivable using all available tactics to maximize delinquent collections while ensuring correct amount of tax is assessed. Future State Taxpayers owing a total of $50,000 or more All tax types Cases are referred to the Large Case Team. This is a virtual team consisting of 6 Revenue Officer IIs, a Revenue Office Manager and an Information Processing Technician. This team consists of our most highly trained and experienced staff. The focus of the Large Case Team is to reduce the Department s most complex and largest dollar accounts receivable using all available tactics to maximize delinquent collections while ensuring correct amount of tax is assessed. Cases are continuously updated with new assets and attachment and garnishments may be issued automatically by the system. CTL s will be issued and taxpayers will be placed on the Tax Debtor website list automatically. Key Tactics Reduced inventory due to complexity of cases; Taxpayer contact including telephone, letter and field visits; large amount of time spent on field visits locating of assets; 30-day referral letter on foreign large dollar cases; Levy program to seize business assets and other personal property on seriously delinquent accounts; Reduced inventory due to complexity of cases; Taxpayer contact including telephone, letter and field visits; large amount of time spent on field visits locating of assets; 30-day referral letter on foreign large dollar cases; Levy program to seize business assets and other personal property on seriously delinquent accounts;