The IRS “Get Ready for Taxes” page contains information for individuals and businesses filing 2018 tax returns. The page provides directions about “How to File,” “When to File,” and “Where to File” as well as the “Small Business and Self-Employed Tax Center.”
Absent from the IRS Statements and Announcements page, however, are details about the opening day of tax season (usually late January). This is the date when the IRS begins accepting electronic tax returns. The announcement is typically made in early December.
For example, the IRS began accepting electronic 2017 returns on Jan. 29, 2018 and continued to do so through Tax Day on April 17. Tax Day for filing 2018 returns is April 15, 2019.
What hasn’t changed is the need for companies to develop a tax season debt collection strategy. This point is valid whether the accounts are managed by agencies or companies conducting their own efforts.
The Workings of a Tax Season Debt Collection Strategy
A successful tax season debt collection strategy is based on the awareness that approximately 35 percent of consumers receiving refunds plan to pay down debt with the funds. With over one third of consumers interested in paying down debt with their refunds, the question is, “Who will they pay first?”
Other factors include preparedness, timing, modification and flexibility.
Successful tax season strategies begin with a foundation of compliance, certification, data protection, and collections technology.
Savvy agency leaders have a plan in place prior to tax season that includes proper staffing and training to handle greater call center volume. The current low unemployment figures have underlined the need for hiring solid individuals and training them in compliance and negotiations.
Timing and Modification
The timing of a successful tax season debt collection strategy entails the proper escalation of efforts beginning in quarter four of the previous year, and incentivizing repayments through quarter one and into quarter two.
Early stage strategies begin during the fall when collectors are instructed to only discuss tax refunds if and when debtors introduce them.
In November and December, a collector might agree that applying a tax refund expected in April is doable, but stress the importance of beginning a repayment plan to prevent that individual from taking on more debt.
This dialogue continues through the early part of the tax season until debtors have actually filed returns and know their refund amounts. At this point, the talk escalates to the discussion of repayment plans beginning after consumers receive their refunds.
Agencies often augment call center efforts with strategy one campaigns (the mailing of demand letters) in February and March advising consumers to apply their tax refunds to debt.
Finally, agencies make real-time adjustments to large segments or individual accounts with the help of strategic predictive analytics as a function of economics, consumer trends or consumer satisfaction surveys. For example, the recent trend of rising auto, education and credit card debt is preventing some consumers from keeping up with those payments as well as healthcare and or utility bills.
Best-in-class agencies make it easy for consumers to address their debt by honoring all forms of payment (cash, check, credit/debit card, and ACH) and having the proper procedures to secure, authorize, monitor and process transactions. They should also offer versatile payment options and accept them via mail or phone.
Flexibility is enhanced by the ability to adjust personnel as well as segments and individual accounts.
What else Contributes to a Tax Season Strategy?
Financial services experience is the final component of developing a successful tax season debt collection strategy.
The management team of Optio Solutions has approximately 150 years of combined management experience. That experience is augmented by a foundation of compliance, certification, data security, and collections technology. In addition, Optio is one of only 57 agencies worldwide to have received PPMS certification from ACA International.
Download our free guide to learn how Optio can deliver a favorable ROI, brand protection, and customer retention for your company this tax season.