Delinquent Taxpayers Shell Out in Shelby County

An information system for the county's tax records helped capture overdue revenue.

by / April 30, 1995
May 95

Level of govt.: County

Function: Tax Collection

Problem/situation: Delinquent taxes were left uncollected.

Solution: Networked tax files and data collection system.

Jurisdiction: Shelby County, Tenn.

Vendors: AT&T; GIS, Columbia Ultimate, Sunriver.

Contact: National Association of Counties 202/393-6226.

MEMPHIS, Tenn. - The delinquent tax dollars owed to Shelby County by property owners were rising each year, threatening to top $50 million. County officials contended that the cumbersome filing system was to blame for the many property owners who owed taxes and were slipping through the enforcement cracks.

But since the county turned to a computerized accounting system a couple of years ago, more than $80 million in back taxes has been collected. And it earned Shelby County a National Association of Counties achievement award.

The achievement award recognizes the county Trustee's Office for its achievements in computerization, specifically through improved taxpayer services, which include: the ability to establish ongoing account history; improved access to current and delinquent tax information; the ability to link owners with multiple parcels of property; the ability to flag accounts having pending appeals, mail returns, bankruptcies, etc.; improved continuity of work flow; automated correspondence to taxpayers; and improved use of personnel.


The Trustee's Office is responsible for collecting more than $258 million in property taxes annually, then investing to leverage more funds for the county government.

Collection efforts were generally successful with the majority of property owners. But inefficiencies in the system allowed others to become delinquent in their tax payments, with little or no repercussions for avoiding - or in some cases, thumbing their noses at - the tax collector. "When I came into office in 1990, we had close to $50 million in delinquents," said County Trustee Bob Patterson.

That backlog, representing 18 years of uncollected property and personalty (capital goods and furnishing) taxes, was attributed to a paper-based filing system that went back at least 40 years. Under that system, some 392,000 tax notices were mailed to property owners during the summer. If the taxes became delinquent, another notice was sent. But that was generally where the enforcement ended.

"There wasn't a regular systematic method of trying to collect delinquent receivables," said Debra Gates, director of banking for the county and former director of collections. To track down delinquent accounts, the eight county tax collectors sifted through four-foot long file trays containing paper copies of each tax bill, looking for the most recent delinquent notice.

But there was no guarantee that the notice they found was the most current. The notices also contained no reference to other parcels the person owned, or what previous action might have been taken by the property owner or county.

"In the old environment, we sent one notice a year, and a delinquent taxpayer might just toss it," said Bobby Stephenson, manager of the delinquent tax collection department. "When the next notice came, the person could just toss that, too. These delinquents didn't have any reason to believe that this was an important piece of paper. No one was calling, and no one was knocking on their door."

"All payments that came in were handwritten on a card," said county systems analyst Joan Serocki. "The clerical effort on the collectors' part was enormous."

"The Collector System immediately freed collectors from those clerical tasks," she said. "Now they spend their time on the telephone, actively pursuing delinquent accounts."


The manual system was changed in 1992 when Patterson, a former data processing manager, spearheaded the drive which resulted in a computer-based tax collection information system. The heart of the system is a SunRiver/AT&T; Global Information Solutions (GIS) 5/50 minicomputer with 96 megabytes of memory. It currently supports access by 32 simultaneous users in the Trustee's office, providing fast and easy access to the status of all tax records.

The county's turnkey revenue recovery solution - both SunRiver hardware and Columbia Ultimate's "The Collector System" software - was implemented by Columbia Ultimate, a specialist in delinquent accounts receivable management systems.

The Collector System allows collectors to track critical events in pursuing unpaid accounts, such as promises to pay, or times to call back as directed by the taxpayer. The system also allows collectors to see any other property tax debts to the county on a taxpayer's record.

A few keystrokes update the information, providing other collectors with the most current data should they need to access the records. All of the information on the system is cross-indexed, allowing a collector to access a file by any number of criteria, including taxpayer name, property address or notice number.

"People will sometimes try to bypass a collector they've spoken to previously, by calling me or one of my managers," Patterson said. "When they do, we just pull up their file on the system. Sitting right in front of me are the notes of past communications with this office. The silence is formidable as you give them feedback from their earlier conversations."

Collectors can work out payment schedules with delinquent taxpayers. This information is also keyed into the system. If a taxpayer says the check will be in the mail at a particular time, a note of the promise is made.

The promise is also tied to an electronic tickler. "If a taxpayer promises to pay by a certain date, we can flag the file to automatically come back up on that date," Patterson said.


Payments are posted to the county's mainframe computer. A magnetic tape from the mainframe is downloaded daily to the stand-alone minicomputer to update collection records. Both computers are located in the county's computer data center, located two blocks from the Trustee's office. Future plans are to automate this update so that a tape transfer is no longer necessary.

If a taxpayer misses a promised payment date, follow-up is immediate. In addition to the one-to-one phone conversations, the system has the ability to automatically send out letters.

"The first one is in fairly mild language," Stephenson said. "If a person has not paid from the first letter, the system automatically sends out a second letter, and a third, and a fourth. After the fourth letter, the taxpayer has a 30-day grace period."

If the tax still hasn't been paid after that time, the account can be transferred to the tax sale department. If it's a personalty tax, a citation can be issued, and bank accounts garnished.

"Through a 120-day period the collector doesn't have to see the account once this process starts. It's automatic," Stephenson said.


Patterson said the system is the best investment the county could have made, and it quickly paid for itself, bringing in $36 million in delinquent taxes in its first two years.

"We anticipated payback to be under a year," he said. "I think it paid for itself in the first month."