Case Study: Revenue Discovery & Recovery
Revenue Discovery & Recovery Program: City of Huntsville, Alabama
RDS' unique relationships with our clients, coupled with our understanding of government services, have afforded us the opportunity to apply practical administration & discovery solutions targeted at revenue enhancement and maximization. These solutions are designed to help local governments to grow existing revenue and drive immediate cash flow.
Specifically, RDS has developed an innovative approach to assist budget- and resource-challenged governments in improving their cash flow, compliance, and collection efforts. In addition to a comprehensive tax administration program we offer a discovery/recovery process which matches a jurisdiction's existing databases against various databases aggregated from disparate systems and resources. We have found that we can identify significant numbers of previously unknown unlicensed businesses operating within a jurisdiction, producing significant added revenues for our client when the appropriate licenses are issued and the unreported taxes collected.
Our recent experience with the City of Huntsville, Alabama illustrates the process. Following lengthy strategic discussions, the City awarded RDS a contract to discover and recover business tax revenues, along with other revenue services. After being awarded the contract, RDS representatives worked with the City to obtain a current copy of the City's business tax roll and other relevant databases.
Once the databases were obtained, the data was carefully scrubbed and normalized in preparation for the data-mining exercise. RDS then compared this database with a database aggregated specifically to predict businesses most likely to be operating within the City in order to generate a file of potentially unlicensed businesses. This "long list" was then subjected to a thorough human review by experienced RDS revenue professionals, to eliminate "false positives", for example, companies already licensed at the same location, but under another name, etc.
Following this review, RDS mailed each non-compliant business a package containing a delinquency notification letter, a business tax fee schedule, and a business tax application. Concurrent with the mailing of first notices, phone calls were placed to all accounts. Second-attempt phone calls were made 30 days after the initial mailing and so on. As proper forms and payments were received and processed by RDS, the newly found revenues were immediately disbursed to the City.
To ensure that businesses received all of the information necessary for license application and payment and prompt and effective customer services for any questions or issues as they arose, RDS provided a Taxpayer Service Center, staffed during normal business hours (9-5 EST, M-F) with voice-mail available to record calls during all other days and hours.
Sounds good, but what were the results for City of Huntsville?
- RDS returned a one-time discovery and collection of new revenue equal to $559,125.77 and recovered 1,474 licenses and increased the taxpayer base by a 4.2%;
- Adding approximately 500 new businesses to the tax rolls will provide for an increase in projected future revenues estimated at close to $160,000 per year, as these businesses pay their taxes, year after year;
- Creation of a "level playing field" for all businesses in Huntsville , is expected to enhance compliance, stemming from the recognition in the business community that the City’s business tax ordinance is actually enforced;
- The discovery/recovery project, coupled with two years of comprehensive administration of the City’s occupation, hotel/motel and liquor excise taxes by RDS, has collectively raised the City's overall revenue from these sources by almost 4.0%;
Understanding that all revenue was not being collected, and operating under the constraints of limited resources, the City’s decision to partner with RDS made good business sense and RDS delivered the results to prove it: RDS has completed more than 100 discovery projects, including recent projects with similar results for larger jurisdictions such as Fulton County and Gwinnett County, GA, and are in early-stage contract implementation with the Washington DC, Office of Tax & Revenue and the City of Birmingham, AL.