Case 4:08-cv-01496-JEJ-TMB Document 117 Filed 07/17/2010 Page 1 of 4

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Kimmett, Thomas D.
From: Furlong,Jamesfffurlong@state.pa.us]
Sent: Monday, November 27,2006 4:07 PM
To: Kimmett, Thomas D.
Subject: FW: Collection of PTBO's Accounts Receivable
Sensitivity : Confidential

Tom,

I am still searching for more specific items regarding the Collection Agency Contracts and potential changes,
however I wanted to confidentially share this "thread" of e-mails with you for your background.

-----Original Message-----
From: Theis, Dofi
Sent: Fríday, November L7,2006 3:56 PM
To: Furlong, James
Subject: FW: Collection of PTBO's Accounts Receivable

lfound this e-mailso far...

----Original Messaqe---

From: Furlong, James

Sent: Friday, August 26, 2005 2:09 PM

To: Coyne, Robert; Theis, Dorty

Cc: Weber, Neil

Subject: REr Collection of PTBO's Accounts Receivable

Bob: I did speak with Mary Hubler yesterday. She is off now until Tuesday. Mary had little knowledge on how the
collection agency processes had worked under the OAG and how it is working now with Revenue making direct
referrals. I informed her of both processes. Having said that, she is correct in being disappointed with agencies
performance on personal income taxes; even more so after understanding how much Revenue has done in the
past year to enhance programs, processes and assistance for them whíle paying 19 and 29% commissions. Mary
reviewed some 102 cases out of 500 and found a "success" rate by the collection agencies of about 9%. This is :

1. Poor performance, and

2. I suspect that the agency's have been working harder on corporation tax cases which have larger
collectible balances and therefore a greater profit. The same is true for sales and employer cases. Corp tax cases
began a large flow on March 1, PIT began large flow mid-March with generally $1,000. and less balances. KITS
has an established regular flow.

3. Frustrating, because the agencies show a "lack of urgency" in aggressively pursuing PlT. To my
knowfedge, only Alliance added personnel for the large volume of income tax case referrals, and based on our
reports they are first in PIT collections since March.

â Cut ue" lLl

u10/2407
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ROOT CAUSES AND PROBLEMS:

1. Past practices under OAG: No reports, no standards, no evaluations, no real deadlines: any collectíon by
an agency in the 6 month or 1 year contract period for a case and the OAG automatically extended the case with
that respective agency for another 6 months or another year. I have seen PIT cases with $5,000. balances with as
little as $10. sporadic payments.

2. LacR of liens and lien capability. As you have previously identified this as a major issue, the significance
grows. After a letter and a phone call, each agency pursues a lien request back to Revenue, beginning , of
course, with the highest dollar cases. lf (and when) Revenue has the capability to mass produce PIT liens, many
of these cases will self-cure or be collected by CATS and less PIT cases will refer to collection agency's. ln the
meantime, collection agencies compete for liens the same as everyone in Revenue enforcement.

3. Two competing voices of authority. OAG rules, practices versus PA Dept. of Revenue. Although we have
successfully absorbed the referral process and are nearing total control over all cases, we have not been able to
convey the message that we have the "big hammer" to decide which agency gets rewards and which one's get
penalized. Until we can effectively do that, agencies feel "safe" with their no-bid contracts and too "comfortable" in
collecting what they can with minimaltimeframes and effort. LinebargerlScoliere is an exception.

PLAN OF ACTION:

. 1. Continue to pursue and implement with OA a capabiliÇ to mass produce liens.

2. After 6 months of the initial mass referral...After Oct. 1, 2005........eva|uate allcollection agencies for
performance and timeliness of collections and internal procedures: Utilizing EPAD's abilities via Jim Schlegel and
others;

A. Success rate: How much money and how many cases did they collect?

B. Timeliness of collections: How fast did they attack the caseload and how quickly did they collect
monies?

C. What was their detailed specific effort? What actions did they perform to collect our money?

3. Based on#2:

A. Reward the best performer:

(1) Refer more cases

(2) Refer the fresher cases

(3) Refer the higher dollar cases

B. Penalize the worst performer:

(1)Receive less cases

(2) Receive older cases

1/1012007
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(3) Receive lowest dollar cases

4. Obtain OAG support for a stronger collection agency effort. OAG communicate to the respective agencies
that they "must perform better or else..." alternative agencies will be considered.

5. Work with OAG to change the language in the next contract due by June 30, 2006.

6. Utilize PHEAA's contracts, experiences and knowledge with collection agencies that we will gain from
meeting with them soon.

7. Change the perception from OAG has the "authority" to the "reality" that Revenue has control of the
money:

A Contract with new agency(ies) thru a delegation from OAG that gives Revenue substantial "control".

B. Reserve the right to re-call any case any time from a collection agency for non-performance
( insignificant actions) on a case...with the express understanding that they will receive no commission.

C. Create a "sense of urgency" for the collection agencies to collect money quickly after receiving the
referrals.

Bob: By separate e-mail I am fonruarding some initailwork that Jim Scglegel did for us on this issue. He is working
to refine it. I have not spoken to him about this particular tax this week.

Please let me know when you wish to discusss. Have a nice weekend.

---Orlginal Message----

From: coyne, Robert

Sent: Thurøay, August 25, 2OO5 1:47 PM

To! Furlong, James

Cc: Richardson, Ke¡th (REV); Weber, Neil; Leighton, Sue; Hubler, Mary; The¡s, Dorty

Subject: Collection of PTBo's Accounts Receivable

¡mportance! High

Jim,

At my bi-monthly meeting with the leaders of the PTBO, I was informed by Mary Hubler that she was
disaópointed wl the performance of the collection agencies. She indicated that PTBO items are not being
worked properly. To say that they are severely under performing may be an understatement. I need
answers to this concern ASAP.

I/1012007
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Pls contact Mary and get her analysis of the situation. Then I want to discus this with you.

Thanks,

Bob

Robert P. Coyne, Esq.

Deputy Secretary for Compliance and Collections

Pennsylvania Department of Revenue

1133 Strawberry Square

Harrisburg Pa 1 71 28-1 I 00

Office: 717-783-3690 Fax: 717-787-3990

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t/t0/2007