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Audit Recommends Utah Use More Agencies to Collect on Unpaid Taxes

It appears as though the state of Utah is going to hire more outside collection agencies to help it recover $552 million in unpaid taxes.

The recommendation was made via an audit of the Utah State Tax Commission by the state’s legislative audit committee. The Tax Commission agreed with the recommendations made in the audit, which includes hiring more collection agents and more collection agencies to bolster the state’s collection efforts.

State law currently requires the commission to wait a year before sending the account to the one collection agency it uses. The audit recommended reducing the waiting period and hiring more collection agencies to cover more accounts. The state’s debt collection office, for example, employs six different collection agencies. The state has had to lay off five collection agents because of budget cuts, which has led to some unpaid accounts not being reviewed or any attempts to collect being made. About 26% of outstanding cases have been referred to a third-party agency, while 23% have been dealt with in-house. That leaves about half of all outstanding accounts that have been unassigned, according to the audit.

The outside agency receives a commission between 14% and 19% on everything it collects for the state.

The state has been employing what it calls a “less aggressive” collection strategy as a means of trying to be understanding and not forcing individuals into financial problems or bankruptcy, but that strategy could be shifting as more agencies are hired.

“We recommend Taxpayer Services utilize multiple [agencies] already on state contract (that meet Tax Commission system requirements) to encourage competition and to best maximize the collection of state tax debt,” the auditors wrote in their report. “The division agrees that there are benefits to having multiple vendors and is in the process of upgrading its systems and participating in the procurement process to facilitate this change.”

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