Kentucky taking aim at delinquent tax debt
A recent computer system upgrade at the Kentucky Department of Revenue (DOR) has led to the collection of more delinquent state tax debt, officials say.
For more than a decade, Kentucky has relied on help from the Federal Treasury Offset Program to collect some of its delinquent income tax debt. The recent implementation of the State Reciprocal Program and the upgrade will make it easier to target delinquent funds owed by vendors and corporations, according to Mack Gillim, executive director of the Office of Processing and Enforcement at DOR.
Approximately $4.1 million in delinquent vendor payments have been received since the system launched Jan. 22, 2011 and officials estimate that recovery efforts for 2012 could be as high as $8 million, he said.
“This new process will assist in not only collecting delinquent tax debt but other debt due the Commonwealth that the Department currently collects as well,” Gillim said.
Once the Department of Revenue’s system identifies delinquent qualified debt, that information is automatically pulled into the new system then transmitted to the United States Treasury’s Financial Management System (FMS).
From there, FMS determines if those debtors are owed any federal money such as tax refunds or vendor payments. If money is owed, those funds are relinquished to the state to satisfy the debt, Gillim said. The state also relinquishes to the U.S. Treasury payments it makes to vendors or corporations if it is discovered they are in arrears, he said.
Kentucky is one of only five states participating in the State Reciprocal Program because other states may lack the legal authority or technical capability to do so, Gillim said.
Tom Morgan, the project manager at Commonwealth Office of Technology’s Office of Application Development, said a team consisting of staff from COT, DOR, the State Office of the Controller, and contractor CGI spent about a year working on the project.
"I think for the complexity of the program we have had a minimum number of problems," Morgan said. “It makes the collections of debt owed to the Commonwealth more efficient, and it will hopefully make up some of the shortfall in revenue.”
More than 100 total programs were created for the project, Morgan said.
“Every time someone wrote a program we had a team walk though it to make sure what they wrote matched the requirements,” Morgan said. “We wanted to do this at a team level to try and improve quality and it seems to have paid off.”
Steve Rucker, commissioner of COT, said the Finance Controller’s Office, Revenue, and COT showed that working in a collaborative fashion can lead to solutions that benefit the citizens of the Commonwealth.
“We must be mindful during these economic times to look for ways to be more efficient,” Rucker said.
State Controller Ed Ross said he anticipates the system will generate considerable revenue for the state. “It’s worked amazingly well from the standpoint of this office,” Ross said. “Pretty much once the system is up and going there is very little intervention,” Ross said.