Government

Government Revenue Collection Association Hosts Free Webinar: Creating the Ideal Collection Environment

2010-11-10T08:53:10-07:00

Orchards, Wash. – The Government Revenue Collections Association (GRCA) invites those working in government debt collection to participate in a free webinar entitled “Creating the Ideal Collection Environment.”

Economic challenges are forcing government organizations to work smarter, faster and are driving new efficiencies. Today’s innovative governments are employing not just one or two, but a comprehensive suite of tools and techniques to achieve desired revenue and collection goals.

A popular session from the 2010 Annual Conference, this webinar explores approaches, technologies and services that can be used to maximize your collection results. The webinar will describe how staff and resources can best be utilized as well as if and when is it best to outsource. Real-world examples and proven best practices will be discussed.

GRCA has partnered with RevQ, to bring this free training session to government collectors on November 17, 2010 at 10:30 am PST. Participants may reserve their space by registering online at www.govcollect.org/webinar.

For more information about the 3rd Annual Conference or membership in GRCA, please visit www.govcollect.org, call 1-877-724-4722 or E-mail info@govcollect.org.

About Government Revenue Collection Association
Founded in October 2008, Government Revenue Collection Association is a non-profit association dedicated to promoting the advancement of government collections. Founded by collection industry leaders, the Association serves as a resource for the latest industry information, technology innovation and compliance programs to help government entities improve and enhance revenue recovery initiatives in today’s collection environment. For more information, visit www.govcollect.org.

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Third Party Debt Collectors an Important Partner in the Recovery of Government-Owed Debt

2010-10-28T08:16:19-07:00

MINNEAPOLIS - ACA International, the leading voice for the debt collection industry, is pleased to learn of the September 2010 Government Accounting Office (GAO) report reinforcing the value debt collectors provide American taxpayers in the collection of unpaid taxes to the Internal Revenue Services (IRS).

In 2009, when the IRS moved to stop using private debt collectors, ACA vehemently opposed the move based on the same findings as the GAO: “IRS's comparative study of the PDC program (private debt collection) was not soundly designed to support its decision on whether to continue contracting out debt collection.”

“Debt collectors provide a very important public service to taxpayers by returning billions of uncollected fines, fees and taxes to federal, state and local government,” said ACA International CEO Rozanne M. Andersen, Esq. “Collecting these government-owed tax dollars reduces the need for future tax increases, keeping more money in the pocket of hard working America consumers.”

In 2009, third party debt collectors recovered $788 million of the reported $30.9 billion owed to the federal government, not including the Internal Revenue Service. From 2006-2009, the last year the IRS used third party debt collectors, $80 million in unpaid taxes was returned to taxpayers.

More than 43 states currently use third party debt collectors to help recover delinquent receivables. In 2009 the National Association of Counties reported that local governments had more than $40 billion in uncollected taxes and fees for which they were using third party debt collection firms to recover. Typically, third party debt collectors recover an estimated 15 percent of government debt; or approximately $6 billion to local government taxpayers.

“We applaud the support Senator Charles Grassley has shown regarding private debt collectors working on behalf of the IRS. We hope he continues his efforts and look forward to working with him and other Members of Congress to renew this important initiative that once allowed $80 million to be returned to the federal government,” said ACA International President Martin Sher.

If a consumer is contacted, talk with the debt collector to verify or dispute the debt; never allow yourself to be threatened or harassed; and visit www.askdoctordebt.com to find reliable information about debt collection and consumer rights.

ACA International, the Association of Credit and Collection Professionals, is the comprehensive, knowledge–based resource for success in the credit and collection industry. Founded in 1939, ACA brings together more than 5,000 members worldwide, including third–party collection agencies, asset buyers, attorneys, creditors and vendor affiliates. ACA International establishes ethical standards, produces a wide variety of products, services and publications, and articulates the value of the credit and collection industry to businesses, policymakers and consumers. For more information about ACA International, visit www.acainternational.org.

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IRS Wrong to End Private Debt Collection Program: GAO Report

2010-10-27T07:10:22-07:00

A report released Tuesday from the Government Accountability Office (GAO) said that the IRS may have used flawed study methodology when it decided to stop outsourcing some delinquent tax collection work to private debt collection agencies.

The IRS started using private debt collectors in September 2006, when it first forwarded accounts to three selected vendors. The tax group killed the program in March 2009, citing a study that indicated the IRS could do the same work at a lower cost (“IRS Kills Private Debt Collection Program,” March 6, 2009). That study was put under the GAO microscope, leading to this week’s report.

"IRS's comparative study of the PDC [private debt collection] program was not soundly designed to support its decision on whether to continue contracting out debt collection," the report said, adding that the "study was not originally intended or designed as primary support for the decision."

The GAO said the sample size of the IRS study was too small to be the basis for the decision to terminate the program. The study also did not take into account taxpayers' compliance cost.

Senate Finance Committee ranking member Chuck Grassley (R-Iowa), who initially called for the GAO to investigate the IRS study, criticized the IRS for not following the guidance it was provided by the GAO and Office of Management and Budget (OMB).

"According to this report, the IRS used a flawed study to justify ending its contracts with private agencies to collect owed taxes that the IRS wasn't collecting on its own," Grassley said in a statement. "The IRS knows the study was flawed because the GAO told the IRS how to do the study. But the IRS didn't implement the GAO's recommendations to fix the study even though it agreed with them. The IRS used the results from the defective cost-effectiveness study to defend its decision to terminate the use of private collection agencies, even though that wasn't the primary purpose of the study."

Grassley has supported the IRS use of private debt collection agencies since the program was conceived. One of the companies on the initial collection contract, The CBE Group, has its headquarters in the state he represents. Grassley noted the involvement of unions in the IRS decision; the most vocal opponent of the private debt collection program was the National Treasury Employees Union, which represents IRS workers.

Grassley said that union advocates told the public that IRS employees could collect tax debt cheaper while the pilot program that tested the effectiveness of private collectors showed money was being collected with private employees garnering higher quality ratings than that of IRS employees.

The GAO recommended that the IRS establish guidance on analyses to support program decisions; establish a policy requiring documentation of program studies; and ensure that PCA-type cases results are considered for IRSs new case selection model. The IRS agreed with the first two recommendations and agreed in principle with the third. But the agency said that while it recognized the limitations of their study, it stood behind the decision to terminate the program.

The GAO’s full report is available at http://www.gao.gov/new.items/d10963.pdf.

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Government Revenue Collection Association Hosts Free Webinar: Social Networking as a Skip Trace Tool

2010-10-19T07:33:12-07:00

Orchards, Wash. – The Government Revenue Collections Association (GRCA) invites those working in government debt collection to participate in a free webinar entitled “Social Networking as a Skip Trace Tool.”

GRCA has partnered with West® A Thompson Reuters Company, to bring this free training session to government collectors on November 1, 2010 at 1pm EST. Participants may reserve their space by registering online at www.govcollect.org/webinar.

Cynthia Hetherington, a well-known trainer with 15 years of experience in research, investigations and corporate intelligence, will discuss using the Web and social networking to find critical information on people.

This webinar will review social- and photo-network Web sites, mapping tools, and other Internet features that can be used for locating people. In this webinar, you will learn how to:

Understand the difference between Web 2.0 and traditional Web sites and learn how to deconstruct a profile for your investigations.
Hunt down online social network profiles.
Connect the associations between users of LinkedIn- and MySpace-type Web 2.0 services.
Take advantage of cutting edge services that are coming up daily.

For more information about GRCA, please visit www.govcollect.org, call 1-877-724-4722 or E-mail info@govcollect.org.

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Rehabilitated Loans Shake Up ED Collection Performance Rankings

2010-10-14T06:11:44-07:00

NCO Group held onto the top ranking in August among unrestricted contractors in the U.S. Department of Education’s student loan contract performance report.

NCO, the world’s largest accounts receivables management company, won with an overall score of 98.40. Van Ru Credit finished second with a score of 95.78 and Pioneer Credit Recovery, a subsidiary of student loan giant Sallie Mae, dropped to third place with a score of 94.89.

ED’s performance scores are based on a weighted average of total dollars collected, total accounts serviced and administrative resolutions. The top performer in each category receives the maximum score for that category, and the other agencies are scored against the top performer. The department awards 70 points for dollars collected to the top performance, 20 points for total accounts serviced, and 10 points for administrative resolutions.

Pioneer actually outscored NCO in the total accounts serviced category, and collected $100,000 more than NCO in August. But Pioneer began the period with a higher average inventory balance because of previous first place wins that earned the Arcade, N.Y.-based firm a greater amount of new accounts when the quarter began (“Dept. of Ed. Releases Important Collections Performance Report,” April 29). As a result, Pioneer’s recovery rate for dollars collected was lower at 1.62 percent when compared with NCO’s 1.72 percent recovery rate, which allowed NCO to earn the full 70 points.

In the small business category, Collection Technology Inc. outscored Coast Professional 96.83 to 82.78 for the top ranking by servicing more accounts and collecting more money. National Recoveries finished a distant third with 59.65 points.

The point spread is the largest ever between the small business contractors, largely due to the impact of rehabilitated loans. Rehabilitated loans are accounts that have nine qualifying payments over 10 consecutive months. The Department of Education said that July results included a fraction of rehabilitated loans for some contractors, but significantly more rehabilitated loans were included in the August results.

Scott Daniels, CTI’s vice president, said the company fell behind in rehabilitated loans during the previous ED contract and had a difficult time recovering. The company learned from the mistake and in the 2009 contract gave rehabbed loans greater priority, Daniels said. He credits success in the rehabilitated loan category with giving CTI an edge in the latest performance rankings.

“(Efforts) that started 10 months ago are starting to come into play,” Daniels said. “In the month of August we had $2.2 million added to our collections based on the rehab funding.”

Without the additional dollars from rehabilitated loans added to its collection balance, CTI would have posted around $630,000, Daniels said.

Now that rehabilitated loans are being added to dollars collected balances, contractors could add millions more each month to their regular collections, helping contractors who get delinquent borrowers back on track and hurting those who have struggled in the area.

Inventory balances also will play a significant role, challenging contractors with larger balances to maintain recovery rates.

“The way (the contract) is set up, to stay ahead you have to keep moving forward because the inventory balances everything out,” Daniels said.

During the first 10 months of the contract, all 22 contractors (17 unrestricted and five small firms) have collected nearly $242.5 million.

Contract Performance Scores for July-August 2010 Period

Unrestricted (Large) Firms	Score (July-Aug 2010)	$$ Collected (July-Aug 2010)
NCO Financial Systems	98.40	$9,757,913
Van Ru Credit Corporation	95.78	$9,682,964
Pioneer Credit Recovery (Sallie Mae)	94.59	$9,896,580
GC Services LP	89.30	$8,558,865
Allied Interstate (iQor)	79.92	$7,665,204
ConServe	78.77	$7,310,228
CBE Group	78.60	$6,992,425
FMS Investment Corp.	77.73	$7,312,536
ERS	75.68	$6,947,194
Financial Asset Management Systems	74.46	$7,985,640
Account Control Technology	72.91	$6,487,555
Progressive Financial Services	69.87	$6,117,866
Diversified Collection Services	66.11	$6,114,375
Windham Professionals	60.87	$4,926,555
West Asset Management	58.49	$5,204,155
EOS-CCA (Collecto Inc.)	56.12	$5,572,216
Premiere Credit of North America	54.15	$4,344,903
Small Businesses
Collection Technology	96.83	$3,643,396
Coast Professional	82.78	$3,006,882
National Recoveries	59.65	$1,923,616
Immediate Credit Recovery	57.61	$1,506,549
Delta Management Associates	49.01	$1,549,926

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Albany, NY Issues RFP for Debt Collection Services

2010-09-07T07:26:52-07:00

ALBANY, N.Y., Sept. 2 -- The Albany Water Board and the City of Albany Department of Water and Water Supply hereby requests proposals from qualified firms to provide collection services applicable to unpaid and delinquent accounts.

The Albany Water Board, a New York State Public Authority, operates and maintains the City of Albany water, sanitary, stormwater and combined sewer collection systems. Minority Business Enterprises and Women's Business Enterprises are encouraged to submit proposals.

***ORIGINAL DEADLINE TO SUBMIT PROPOSALS HAS BEEN EXTENDED FROM SEPTEMBER 7, 2010 TO OCTOBER 1, 2010 BY 2:00 P.M. Further, an addendum to the RFP will be posted on the City of Albany website on or before September 10, 2010. The addendum will answer all vendor questions submitted to date.

To download a copy of the RFP, please click here: http://www.albanyny.org/Files/RFPCollectionAgencyServices2010.pdf.

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NCO Group Bests Pioneer for Top Ranking in ED Collection Contract

2010-08-30T08:53:59-07:00

NCO Group Inc. outperformed Pioneer Credit Recovery to receive the top ranking in July among unrestricted contractors in the U.S. Department of Education‘s student loan collection contract competitive performance report.

The world’s largest accounts receivable management company won the top spot with an overall score of 97.62, well ahead of Pioneer, which scored 82.65 points. ERS climbed 10 spots to finish third with 81.89 points.

Performance rankings among the unrestricted contractors have been the most volatile since ED’s newest collection contract began in October 2009. But July marks the first time that Pioneer, a division of student loan giant Sallie Mae, has not ranked first.

NCO outperformed Pioneer in the administrative resolutions and dollars collected category, but gained its biggest lead in the latter category by collecting upwards of $400,000 more than Pioneer in July.

NCO was reserved in comments about its latest standing in the ED contract performance results.

“The first month of a period is not as significant as the results at the end of the period, which will be Sept 30th. NCO would prefer to comment at the end of the full period,” said a company spokesman.

On behalf of Pioneer, spokesman Rick Castellano said, “We are proud of our exceptional performance on behalf of the Department of Education.”

ED contractors say end of quarter results promise even more surprises because those results will include student loans that have been rehabilitated.

Rehabilitated loans are loans that have nine qualifying payments over 10 consecutive months. July results included a fraction of rehabilitated loans for some contractors. But significantly more rehabilitated loans are expected to be included in August results, said James Lincoln, general manager and ED contract administrator for Van Ru Credit Corp.

“This is where you will start to see the separation occur,” Lincoln said, adding that some agencies are expected to add between $6 million to $12 million in rehabilitation loans on top of what they have collected in regular dollars when the rehabilitation loans begin to be factored into the performance results this quarter.

“That’s what will spread out the pack,” he said.

In the small business category, Coast Professional, Inc. reclaimed the top ranking with an overall score of 96.33, replacing Collection Technology, Inc. which finished fourth. National Recoveries was ranked second with 86.67 points and Immediate Credit Recovery scored 82.94 to finish third.

Brian Davis, CEO of Coast Professional said he is pleased that Coast regained the lead, but is taking nothing for granted. The companies in the small business category often are separated by fractions of a point.

“We have a lot of respect for the competitiveness of other contractors. Everyone (at Coast Professional) is aware of what needs to happen and how we get it done,” Davis said.

During the first nine months of the contract, all 22 contractors (17 unrestricted and five small businesses) have collected nearly $140.7 million.

Unrestricted (Large) Firms	Score (July 2010)	$$ Collected (July 2010)
NCO Financial Systems	97.62	$ 2,438,023
Pioneer Credit Recovery (Sallie Mae)	82.65	$ 2,000,149
ERS	81.89	$ 1,988,990
GC Services LP	80.70	$ 1,883,221
CBE Group	79.04	$ 1,839,864
Allied Interstate (iQor)	77.25	$ 1,872,575
ConServe	73.93	$ 1,721,136
Financial Asset Management Systems	73.89	$ 1,975,353
Diversified Collection Services	70.34	$ 1,719,389
Account Control Technology	68.87	$ 1,510,894
Progressive Financial Services	68.44	$ 1,515,907
Van Ru Credit Corporation	67.09	$ 1,443,159
Windham Professionals	59.75	$ 1,227,580
FMS Investment Corp.	58.50	$ 1,257,662
Premiere Credit of North America	56.56	$ 1,231,642
EOS-CCA (Collecto Inc.)	53.37	$ 1,322,932
West Asset Management	48.55	$ 1,023,122
Small Businesses
Coast Professional	96.33	$ 703,984
National Recoveries	86.67	$ 617,847
Immediate Credit Recovery	82.94	$ 510,022
Collection Technology	82.76	$ 549,886
Delta Management Associates	69.29	$ 484,886

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ACA Joins U.S. Chamber Call to Repeal IRS Reporting Requirement in Healthcare Bill

2010-08-27T08:06:07-07:00

As the new health care bill slowly begins to take effect and people begin to examine the small details within the legislation, little known provisions have been discovered that have the potential to impose large burdens on small business in the very near future. One of these provisions is known as the 1099 reporting requirement.

This requirement, added to the health care bill because of the need to reduce a tax gap and raise revenue for the bill without raising taxes, amends the 1099 reporting requirement in the Internal Revenue Code by removing the reporting exemption for companies and expanding the types of payments that need to be reported to include property and other gross proceeds.

Opposition to this reporting requirement has steadily grown in the months since passage of the health care bill because of the unnecessary paperwork imposed on business by expanding the 1099 reporting requirements. Unlike other reporting requirements that have had their monetary thresholds periodically increased through legislation or indexing for inflation, the 1099 reporting requirement has remained unchanged since 1954. Thus, a company must fill out a 1099 information return with the Internal Revenue Service (IRS) if the payments to a payee in the course of a trade or business equal at least $600 dollars. In this day and age, a frustratingly high number of minor business expenditures will now have to be carefully documented and submitted to the IRS.

While large companies may have the infrastructure and accounting departments to deal with this level of paperwork, small business will be overwhelmed by the new administrative burden and will be unable to function under the new standards. This has created tremendous opposition to the requirement, with businesses and industry associations calling for immediate repeal of the requirement. In response, the U.S. Chamber of Commerce is circulating a letter of concerned parties to repeal this onerous regulatory requirement, and ACA International has signed on to this letter. Legislation has also been proposed by Senator Mike Johanns (R-NE) and Representative Dan Lungren (R-CA) to repeal the reporting requirement.

ACA will continue to monitor federal legislative and regulatory developments to prevent harmful provisions from impacting the industry. If there are any questions regarding the 1099 reporting requirement, please contact ACA Government Affairs Specialist Nick Morgan at 202-547-2670 or morgan@acainternational.org.

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MSB Signs Statewide Collection Agreement with Colorado Judicial Branch

2010-08-09T07:06:40-07:00

Gila Corp., through its business unit, Municipal Services Bureau (MSB), is pleased to announce it has been named an approved vendor to provide outsourced collections and payment processing services to the State of Colorado Judicial Branch.

“We are delighted by the opportunity to work with the State of Colorado. MSB has proven its ability to recover more revenue for hundreds of courts all over the nation, and we intend to deliver exceptional results throughout the State as well,” said Bruce Cummings, CEO of MSB. MSB collects delinquent court fines, fees and debts for more than 550 governmental entities nationwide.

“MSB works exclusively with government agencies, and our unique experience enables us to find solutions to improve recovery rates and generate revenue for our clients,” Cummings added. MSB is currently under contract with the 10th and 17th Judicial Districts of Colorado and is in the process of securing additional jurisdictions.

About Municipal Services Bureau
Founded in 1991, Municipal Services Bureau offers outsourced collections, payment processing and call center services to governmental entities nationwide. Headquartered in Austin, Texas, MSB empowers talented employees with advanced technology, data management tools and leading edge business practices to exceed the expectations of its clients. MSB currently works with more than 550 clients in 34 states and is licensed to collect throughout the United States.

MSB distinguishes itself based on its brand: Experience, Execution and Ethics. The Company has achieved the Professional Practices Management System (PPMS) certification from the Association of Credit and Collections Professionals (ACA International). Additionally, the Company is a SAS 70 (Type II) certified service organization and maintains an A+ rating with the Better Business Bureau. MSB is also a sustaining member of the National Association for Court Management (NACM). For more information, please visit www.MuniServ.com or call # 1-800-568-7004.

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Government Collections Sector Evolving into Full Service Market

2010-08-05T07:36:29-07:00

For those of you who saw the insideARM.com daily news yesterday, you may have noticed the headline article that discussed Gila Corp’s recent acquisition by a private equity firm ("ARM Firm Gila Corp. Acquired by Private Equity Group," Aug. 4). I read this announcement with great interest, as the transaction reflects a trend that I have seen unfolding over the past year.

We typically see a significant increase in buyer interest within the ARM government sector during the first year or so after the selected debt collection vendors begin to receive accounts from a new Department of Education contract. Well, we are still in the midst of this time period for the current contract, as I’m sure most if not all of the vendors can attest. So we’ve seen that interest.

But over the past several months we have also experienced a growing number of strategic and financial buyers who are actively seeking ARM companies with local and state government clients. Why? For several reasons:

The government market is large and growing – there is currently close to $200 billion of outstanding government receivables at all levels (not including government sponsored student loans originated through guarantors or IRS debt)

The internal government collection operations are less sophisticated – Outsourcing is producing better and faster liquidation results in many instances

A growing number of local and state governments need to find additional ways to reduce their budgets – Reducing staff by outsourcing functions such as receivables management is becoming a necessity, not an option

Acquiring a platform is faster than building one organically, and offers the buyer instant market credibility

There is another reason why certain strategic and financial buyers are excited about acquiring a government receivables management company. They, like me, see the early signs of a revenue cycle management industry forming within this market, a trend that is likely to evolve similarly to the revenue cycle management industry within the healthcare sector.

In the healthcare sector, it began with hospitals and large physician groups outsourcing specific functions (patient eligibility, billing, claims management, etc.), but over time it evolved into contractors managing the entire receivables management process for their clients. This evolution was necessary because of a need among certain healthcare companies to reduce their internal costs in order to survive, a trend we see unfolding with certain government entities as well.

The formation of a revenue cycle management industry within the government sector is being driven by one simple reality: the acceleration of the federal deficit has significantly reduced the amount of funding available for state governments, which in turn has impacted the funding available for local governments. As a result, many local and state government entities have been required to substantially reduce their budgets, forcing some of them to cut their staff and find other cheaper solutions for their needs.

We are already aware of certain government contractors performing as master servicers for some of their government clients, and it is only a matter of time before these and other service providers end up managing the entire receivables management process. I believe this is a necessary step for certain government entities, and one that offers tremendous opportunities for those companies who have the knowledge and ability to more efficiently manage these operations.

Mark Russell manages M&A transactions for Kaulkin Ginsberg. To confidentially discuss your business interests, please contact Mark Russell at 240-499-3804, or by email.

ARM Firm Gila Corp. Acquired by Private Equity Group

2010-08-04T08:02:56-07:00

An Austin, Texas-based private equity firm announced yesterday that it had acquired Gila Corporation, a major player in the municipal and government debt collection sector through its Municipal Services Bureau (MSB) unit.

Owners Resource Group said in a press release that it worked with Gila’s management to facilitate the deal, the terms of which were not disclosed.

The transaction, which closed July 31, will see Gila’s senior management team stay in place, including current CEO Bruce Cummings.

“This relationship will be a significant positive for our employees and customers,” said Cummings. “With the full strength of ORG’s capital and resources behind us, we intend to accelerate our service offering to exceed the needs of our clients while maintaining the high standards of quality and customer service our clients have come to expect.”

“The Gila management team has built a leading company in the accounts receivables management space,” said Mark Green, Chairman of Owner Resource Group. “We believe the Company’s long track record of providing outstanding service to their customers in a highly ethical manner differentiates Gila from their competition and we look forward to supporting the Company’s continued growth.”

Gila, also based in Austin, is an accounts receivable management firm founded in 1991 that focuses on the government collection sector as well as the financial services market. Through MSB, the company works for more than 550 government clients in delinquent tax, fine and fee collection. Gila’s other unit, Gila Group, provides outsourced debt collection and payment processing services for financial institutions.

The company employs 400 people in Austin.