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By LeAnn R. Ralph
COLFAX — The Colfax Village Board’s public safety committee is recommending that the village contract with the state Department of Revenue as the debt collector for the Colfax Rescue Squad.
The Colfax Rescue Squad’s current debt collection agency is a company out of Green Bay that charges a 25 percent fee, said Don Knutson, director of the Colfax Rescue Squad, at a meeting of the public safety committee July 14.
Knutson said he was looking for “a better deal.”
Roxy Walker, Agency Collection Programs, state Department of Revenue, said DOR would be able to do much better than 25 percent since the State Debt Collection Initiative does not charge any fees to the agency trying to collect the debt and instead charges fees to the person who owes the debt.
The State Debt Collection Initiative was created by the state Legislature in 2009 with Wisconsin Act 28 to help agencies in the state to collect on debts.
Ultimately, SDC helps the taxpayers in the community because instead of paying a fee on the debt that is collected, all of the money is returned to the agency. When the rescue squad carries bad debt that means all citizens pay more to account for the bad debtors, Walker said.
Walker said she, personally, does not believe government debt should be used for profit.
Third party collection agencies take money out of the community, and the money needs to come back to the community to the taxpayers, she said.
The advantage to the Department of Revenue doing debt collection is that DOR “knows who people are banking with and knows where they are working,” she said.
The SDC program collects debts by setting up payment plans, intercepting tax refunds, doing wage attachment orders and through bank levies, Walker said.
SDC charges the debtor 15 percent of the debt collected or a $35 minimum, she said.
Agencies signed up with SDC are required to send a warning letter to debtors letting them know the debt is being turned over to the DOR and that they have 30 days to settle it before the debt is turned over, Walker said.
If the letter comes back as undeliverable, the agency has done its due diligence, and then DOR also knows it is a “bad address” for that individual, she said.
According to the Federal Trade Commission, it is the responsibility of debtors to update their addresses with agencies where they owe a debt, she said.
If it turns out the debt is uncollectible for some reason by the DOR, then the Colfax Rescue Squad can turn the debt over to a third party collection agency, Walker said.
Out of state
Knutson asked if the SDC program can collect debts from people who do not live in Wisconsin since a certain amount of the debt CRS is carrying was generated by people who live out of state.
One of the “mental tools” SDC uses is a letter sent out on Wisconsin Department of Revenue letterhead that is delivered in a “scary envelope,” Walker noted.
If the out-of-state debtor is banking with a national bank that has a brick and mortar location somewhere in Wisconsin, then DOR can do a bank levy to collect the debt, she said.
For many years, the Bank of America had no locations in Wisconsin, and then Bank of America finally installed an ATM in Milwaukee, and now DOR has access and can pursue bank levies for people who have Bank of America accounts, Walker said.
A bank levy is a legal action that allows DOR to take money from an individual’s bank account to satisfy a debt. The bank freezes the money in the account and is required to send the money to pay the debt.
DOR can also access money from non-employer retirement accounts and can submit a wage request for out-of state debtors as well, Walker said.
Typically, out-of-state employers do not want to “mess with” a state tax agency, she said.
If the individual owes money to the Department of Revenue, the DOR debt is satisfied first. After that, any other state agency debts are paid, and then the local agency is paid the debt owed, Walker said.
With the SDC program, the Colfax Rescue Squad would be third in line to receive the money, she said.
The Colfax Rescue Squad already registers bad debt with the state’s Tax Refund Intercept Program (TRIP), and with TRIP, the Colfax Rescue Squad is actually sixth in line to receive money, Walker said.
Lynn Niggemann, village administrator-clerk-treasurer, asked if the rescue squad debt would be posted both to TRIP and SDC at the same time.
Niggemann handles the accounts payable and accounts receivable for the Colfax Rescue Squad.
If the debt is already in TRIP, then the TRIP debt would be changed to zero, and the debt put into SDC because TRIP is a separate program, Walker said.
TRIP is exactly what it sounds like — if someone is scheduled to receive a tax refund from the state and a debt is registered with TRIP, the tax refund is sent to the agency that registered the debt.
Knutson said he has received some unpleasant telephone calls from people who were expecting a tax refund because they wanted to use it to go on vacation or were planning to buy something for their children, such as shoes or back-to-school supplies.
SDC agents receive those telephone calls, too, Walker said, noting that many of the SDC agents enjoy arguing with people and do not mind getting the telephone calls.
TRIP is a passive program that waits for a tax refund to come along, and SDC is an active program that goes out and seeks to collect the debt, Walker explained.
With the SDC program, the Colfax Rescue Squad will receive three reports each month: a summary of all debts and balances; a transaction file of deposits listing the debtors and the amounts paid; and a return file of uncollectible debt, which can occur if the debtor is deceased, for example, she said.
The Colfax Rescue Squad invoices for “no transport” when an ambulance is called and the person refuses transport. Will SDC collect for no transport invoices? Knutson asked.
When people refuse transport, they also are unlikely to pay the ambulance bill.
Knutson said people tell him, “I didn’t call the ambulance, so why should I pay for it?” At which point, Knutson asks them if they are lying there unresponsive, is the person who found them unresponsive just supposed to ignore the situation?
For most of the no transport invoices, someone else believed he or she was helping by calling an ambulance, Knutson noted.
Once a debt is turned over to SDC, it is a debt, and it does not matter how the debt was generated, Walker said.
Mark Halpin, village trustee and chair of the public safety committee, asked how many times people have refused transport.
The Colfax Rescue Squad invoices $300 for no transport, and all together, the rescue squad is perhaps carrying $30,000 in bad debt for people refusing to pay for refusing the ambulance, Knutson said.
Some of the bad debt on the rescue squad’s books also is from Medicare, which will only pay a certain amount. On an invoice for $1,300, for example, Medicare may only pay $300 or $500, Niggemann said.
The SDC program first tries to set up a payment plan with a debtor. About 11 percent of the debt collected by SDC are bank levies, and voluntary payments are over 25 percent of the debt collected, Walker said.
If SDC cannot get voluntary payment, then the next step is to do a wage claim. Bank levies are third, she said.
Most of the ambulance services around the state are quite happy with what SDC collects for them, Walker said, adding that it is an interesting exercise to do a Google search for “how to not pay ambulance debt.”
There are people who cannot pay, because they are on disability, for example, but there are others who have reduced the withholding on their paychecks to the point where they do not receive any tax refunds just to avoid having their tax refund intercepted to pay a debt, Walker said.
But even without tax refunds, “they still have other money,” she said.
Over the years, SDC also has had people say they did not file any tax returns until they thought the statute of limitations had run out for their bad debts, Walker said.
“I think (SDC) is a good way to increase revenue” for the Colfax Rescue Squad, Knutson said.
The public safety committee voted unanimously to recommend that the village board approve signing up with the Department of Revenue State Debt Collection program.
In addition to Halpin, Village Trustees Carey Davis and Logan Michels also serve on the public safety committee.