Tax Administration

States are changing their delinquent tax collection strategies to boost collections and make their collection programs more efficient. Among the recent changes some states have made are (1) new or improved accounts receivable management information systems; (2) updated written billing procedures; (3) use of telephone collection techniques; and (4) denying taxpayer state licenses and permits, such as those for liquor and car dealerships, if delinquent taxes go unpaid. Other developments on the state level include the increasing use of private collection companies to collect delinquent taxes and the use of credit card tax payments. This fact sheet summarizes the view of state tax administrators on these efforts to collect delinquent state taxes.

GAO found that: (1) many states have made changes to their delinquent tax collection procedures to increase collections and program efficiency; (2) state tax collection program improvements include new or improved accounts receivable management information systems, updated written billing procedures, and the use of telephone collection techniques and enforcement programs that restrict taxpayer access to certain state business licenses and permits; (3) 8 states have modified their revenue officers' roles as they implemented changes in their collection strategies; (4) 37 states use enforcement tools that encourage taxpayers to pay delinquent taxes; (5) at least one state believes its enforcement efforts are successful in minimizing the amount of time spent in collecting taxes; (6) many states have collection tools not currently available to IRS including the use of private collection companies to collect delinquent taxes from in- and out-of-state taxpayers and allowance of credit card tax payments; (7) states have mixed views on the effectiveness of private collection companies in collecting delinquent taxes; (8) most states believe credit card tax payments are effective; (9) all of the states reviewed allow taxpayers to pay delinquent taxes in installments; and (10) most states do not accept a compromise for settling debt for less than the total amount.