City goes after delinquent taxes

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March 21, 2010

By Karen Middleton karen@athensnews-courier.com The News Courier Sun Mar 21, 2010, 02:00 AM CDT

— Think you can close up shop and skip paying delinquent sales tax?

Think again. The city of Athens has long employed a collection service that goes after delinquent taxpayers.

Athens City Clerk John Hamilton said he has been employed by the city for six years and officials were using the service of AlaTax collection services at the time he came.

“We use Revenue Discovery Systems, which was formerly AlaTax, and have expanded their services to not only collect delinquent sales tax, but also alcohol and lodging taxes,” said Hamilton. “They take a percentage of the fees collected.”

Hamilton said RDS provides comprehensive services that include depositing collected funds once a month in a city account and also submitting periodic reports that give the status of businesses.

According to the RDS Web site, the company, using a taxpayer database, generates statistical models that identify taxpayers falling farthest outside normal ranges.

For example, the RDS system scores taxpayers according to deviations both from the taxpayer’s own pattern of receipts and payments (comparing returns from the same taxpayer from one year to the next) and also by comparing each taxpayer’s returns with the normal ranges of comparable taxpayers.

RDS receives only a percentage of the delinquent fees/taxes discovered and recovered as a direct result of its services. Typically, there are no up-front costs for this purely “results-based” service.

“Fifty percent of the towns and cities across Alabama use them,” said Hamilton. “Also, when someone goes into business, they can call them and they will send them all the forms they need.”

Hamilton said the company sends out letters to delinquent taxpayers, and if that doesn’t get results, they place liens against property.

Hamilton said that typically data coming from RDS is broken down into easily readable charts on gross amount of sales taxes compared to the years before, graphs and financial information.

“Some towns use them for renewal of business licenses,” said Hamilton. “We have not used them for that. If we, the city, don’t have a business license on file for someone, but RDS has data in its system of them sending sales tax in, they try to match up those with the business licenses.

“If they find someone hasn’t taken out a business license for the last five years, they can go back and collect for all five years. Then they send us half.”

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