A word of caution to consumers who are behind on paying their state taxes — the Minnesota Department of Revenue is getting far more efficient at collecting the money it is owed.
Minnesota collected $266.4 million in tax debt this year, according to the Revenue Department. The state still has about $381 million in unpaid tax bills, but that is down roughly $80 million from 2012.
In a time of razor-thin budgets, the extra money can provide a little cushion to help prevent future deficits.
The improving economy probably gets some of the credit, but Department of Revenue officials say they are completely overhauling their debt-collection system.
Gone are the days when a delinquent tax bill could sit for six months before it even started moving through the system.
“The collection division has made a ton of changes. They have truly done some major streamlining,” said Terri Steenblock, assistant commissioner of individual taxes. “The dollars collected is also increasing.”
Over the past few years, the collections division has re-evaluated every process in the system.
One thing it learned — the tax debt collection notices were often confusing and needlessly long. So a simple change was made, rewriting the forms in plainer language that more clearly stated the debt owed and explained how to get it resolved.
In the past, the Revenue Department could send only 100 delinquency notices at a time. Otherwise, the staff became swamped by the calls from those who received letters.
Since then, the agency has cross-trained many of its workers to handle calls. Now, the department can send out 6,000 letters in a single blast and still handle the deluge of calls.
“We are just getting to the debts a lot faster,” Steenblock said. “Because of the streamlining, the debt is always moving.”
Once a tax bill is sent, taxpayers have 60 days to pay or appeal. If they fail to do either, the tax debt goes to collections.
Historically, that is a point where things could bog down. Not so much anymore.
“If the taxpayer doesn’t address the debt in 30 days, on Day 31 it goes on to the next step,” Steenblock said.
The work appears to be driving down the amount owed to the state, which has edged up dramatically in the last decade.
In 2004, taxpayers owed the state $284 million. By 2012, that amount swelled to $461 million. Those numbers do not include people who scheduled payment plans or slipped into bankruptcy. Consumers who have filed for bankruptcy can’t escape their state tax debt, but the Revenue Department can’t pursue the debt until the taxpayer emerges from bankruptcy protection.
Steenblock credits Gov. Mark Dayton’s determination to streamline state government for such a dramatic overhaul of the debt collection system.