While Utah is getting better at collecting overdue taxes, a new audit says delinquent taxpayers still owe more than $552 million for the past five tax years.
One key reason that more is not recovered: The state laid off the equivalent of five collection agents because of budget cuts, according to a legislative audit released Tuesday.
The audit added that for every 2 cents spent on collection agents, the state tends to retrieve $1 in revenue.
“We recommend that the Legislature consider funding additional collection agents,” the audit says.
Scott W. Smith, interim executive director of the Utah State Tax Commission, agrees. “More agents will result in improved collection rates,” he wrote in a response to the audit.
The report noted that the total taxes owed to the state over the past five years was $42.6 billion. Of that, $2.3 billion was not paid on time. And $552 million is still owed, about 1.3 percent of the original amount billed.
That $552 million is roughly equivalent to what the state spends on its annual human services budget.
Since the last similar legislative audit in 2003, the report said the tax commission “has made great improvement in its collections by implementing a new case selection process and standardizing its collection activities.”
For example, the state targets cases where it is most likely to collect — and in bigger amounts — by scoring them on such factors as known assets, known sources of income and how old the debt is.
Despite such improvements, “We believe even more can be done to reduce the amount of outstanding taxes,” the audit said.
At the top of the list is hiring more collection agents, training them better and providing managers at each collection office — as some in Hurricane and Provo now have managers working remotely in Salt Lake City.
Auditors noted the better training and oversight might eliminate current big differences in closure rates. It noted one office “closed an average of 438 cases per agent, compared to an average of 331 closed in another district.”
Because many cases have sat long periods without ever being assigned to agents, the audit suggested that the state make more use of outside collection agencies — and that the Legislature consider erasing a one-year waiting period before cases may be assigned to them.
On another issue, the audit said the Tax Commission’s Division of Motor Vehicles is close to achieving its goals to reduce wait times — but it could still improve.
The division’s goal is to serve 94 percent of customers within 20 minutes. The audit said that two of the six state-run DMV offices have met that goal. Three are at 92 percent. But one (the report did not say which) was at 83 percent.
The one with the longer waits “struggles with space. The facility lacks the space for additional workstations, which are needed to serve more customers,” the audit said.
The report also said that DMV is improving wait times while the number of customers and transactions has increased — and the number of employees decreased slightly.
