There is only one season that really matters to the debt collection industry — the tax season that runs from late January to mid-April. Hence the need for planning a tax season collection strategy. There are others types of seasons, however, including those recognized by people living in a variety of places around the world.
Individuals from tropical regions often refer to the dry season and rainy season; most of the world follows the astronomical seasons (spring, summer, autumn and winter) of the Gregorian calendar; and numerous cultures recognize six seasons that roughly translate to early spring, spring, high summer, late summer, autumn and winter in western countries, or spring, summer, monsoon, autumn, early winter and late winter in south Asia.
- Important Tax Dates
- Why Develop a Tax Season Collection Strategy?
- What is Needed for a Tax Season Collection Strategy?
- Who Should Apply Your Tax Season Strategy?
- Final Words
Important Tax Dates
In the debt collection industry, individuals leading collection operations start planning their tax season collection strategy during late summer and into autumn in order to be fully prepared.
Tax season officially begins on the date — typically in late January — the IRS begins accepting electronic tax returns.
For the 2019 tax year, for example, the IRS will announce in December 2019 that it will begin accepting 2019 electronic tax returns on a specific date in late January 2020. All of this can be a little confusing, but that’s the way the IRS rolls.
What is known is that Tax Day for the 2019 tax year is April 15, 2020. This holds true for individuals and businesses whose tax year follows the calendar year. For those using the fiscal year of July 1, 2019 to June 30, 2020, tax returns are due October 15, 2020.
Why Develop a Tax Season Collection Strategy?
The short answer is that consumers are flush with money during tax season because most will receive tax refunds. The data is fairly consistent over the last several years: the IRS says about 70% of people filing individual returns will receive refunds, and surveys from the National Retail Federation indicate that about one third of consumers plan to use their refunds to pay down debt.
This creates the perfect storm for collecting debt and is why some collection agency executives say, “tax season is our Super Bowl.”
What is Needed for a Tax Season Collection Strategy?
Those same operations leaders will also say that a successful tax season collection strategy is contingent upon preparedness, timing, flexibility and modification.
Preparedness — Develop an effective strategy as a function of the latest compliance, consumer trends and macroeconomic conditions. Also hire and properly train additional collectors as needed.
Timing — Conduct collector briefings in quarter four, and incentivize consumer repayments through quarter one and into quarter two.
Flexibility — Increase flexibility during tax season in response to consumers’ expressed interest in paying down their debt.
Modification — Apply real-time adjustments to individual strategies or entire segmentations as a function of consumer trends, feedback from consumer surveys, and economic conditions.
Who Should Apply Your Tax Season Collection Strategy?
Planning and implementing a successful tax season collection strategy is the job of best-in-class agencies, though some organizations have the wherewithal to conduct their own efforts.
Either way, the parties doing the collecting should have a solid corporate structure that possesses a compliance management system, a variety of collection certifications, tight data security standards and practices, top-notch collections technology (software and telephony), and last but not least, experience in collecting for a variety of industries and verticals.
Optio Solutions was founded on a solid framework of compliance, certification, data security, receivables management technology, and experience.
Compliance is maintained with the help of a compliance management system, the director of corporate compliance, and a stand-alone quality assurance team.
Data security and other certifications are outstanding: PCI DSS 3.2, SOC 1 Type II and SOC 2 Type II, and Professional Practice Management System (PPMS) from ACA International (one of only 50 agencies in the United States).
The collections software platform is produced by one of the leading vendors in this sector.
Finally, Optio part of a financial services organization having nearly 36 years of collection experience in a variety of industries and verticals.
Download our free guide about tax season strategies to learn how Optio can deliver a favorable ROI, brand protection, and customer retention for your company.