The tax season footprint recedes slightly each year with an ever increasing volume of electronic tax returns, but experienced collection agencies know it still offers great potential for successful debt recovery. In 2018, for example, tax season peaked between mid-February and mid-March while year-over-year collection efforts increased by two thirds in some instances.
At Optio Solutions — where our vice president of operations calls tax season the “Super Bowl” of debt collections — systems and staff are already prepared for this exciting period of debt recovery. While the anticipation is building, the upcoming tax season is expected to enhance the favorable return on investment, brand protection and customer retention delivered by Optio throughout the year.
When can we file taxes for 2018?
In the meantime, taxpayers, accountants and debt collection agencies are uniformly awaiting the IRS to announce the official start of the 2019 tax season, designating the date the bureau begins processing 2018 electronic tax returns. That announcement is usually made in early December.
While that date has yet to be determined, one fact remains — tax season will begin in late January 2019 and last through April 15, 2019 (aka “Tax Day” and the deadline for filing 2018 Individual returns).
When should I expect my tax refund?
The IRS answers this question by cautioning taxpayers to be aware of misleading online refund charts projecting tax refund dates.
“These refund charts can overlook that many different factors affect the timing of tax refunds, ranging from the accuracy of information on the return to whether a taxpayer files electronically,” states the IRS. “In addition, the IRS and state revenue departments have increased their security protocols against identity theft and refund fraud, which also can affect the timing of federal and state refunds.”
Important knowledge for debt collectors
The IRS says that it “issues more than nine out of 10 refunds in less than 21 days; however, it’s possible your tax return may require additional review and take longer. … E-File coupled with direct deposit remains the fastest way for taxpayers to receive their refunds.”
Why should this be of note to debt collectors?
The answer is that savvy debt collectors can leverage this info into actionable repayment plans for debt recovery once consumers agree to start repayment using their tax refunds. The collector’s response may proceed as follows:
“It’s great that you want to apply your tax refund to your debt. Since you filed your e-return this week, the IRS says you can expect your refund within three weeks. Let’s schedule your first payment one month from today. … How does that work for you?”
This scenario is repeating thousands of times during tax season by experienced collectors who are focused on successful debt recovery. Nevertheless, the collector strategy actually begins in the fall when agents discuss 
applying tax refunds if and when debtors introduce the subject during phone calls.
Before the new year, for example, a collector might agree that applying a tax refund is helpful, but stress the need for beginning an immediate repayment plan to prevent that individual from falling into deeper debt.
These collectors are managed by operations leaders who engineer an entire tax season strategy based on the knowledge that about 35 percent of consumers receiving refunds plan to pay down debt with the funds.
What goes into an effective tax season collection strategy?
Experienced operations leaders understand the importance of preparedness, timing, modification and flexibility in launching and maintaining a successful tax season strategy and garnering debt recovery.
These four factors consider the following actions by operations leaders:
- Track consumer trends, compliance changes and economic conditions, and share the results with collectors beginning in autumn of the previous year.
- Conduct the proper consumer outreach and incentivize repayments throughout tax season.
- Use strategic predictive analytics to make real-time adjustments to large segments (or individual accounts) as a function of economic conditions, trends or consumer satisfaction surveys.
- Hire more collectors as necessary to handle greater call center volume during tax season.
An important component of strategic predictive analytics involves knowing which consumers are likely to receive refunds and apply them to debt repayment plans.
Getting help with debt recovery
Best-in-class agencies with well-planned tax season strategies offer many advantages over in-house efforts. The in-house startup and operating costs are enormous, and a lack of experience may result in compliance issues or possible litigation.
Optio’s tax season strategy is based on a foundation of compliance, quality assurance, certification, data security, collections technology and more. Optio is one of only 57 agencies worldwide to have received PPMS certification from ACA International.
Contact us today to discuss how Optio can create an individualized tax season debt collections strategy for your organization.
