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The Michigan Department of Treasury

Welcomes the

MSATA Conference Attendees

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State Agency Collections

Presented by :

The Michigan Department of Treasury, Collection Division

August 2006

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STATE AGENCY COLLECTION AUTHORITY

• Michigan Compiled Laws Section 205.3 of the Revenue Act of 1941, as amended, states: “The department shall have all the powers and perform the duties formerly vested in a department, board, commission, or other agency, in connection with taxes due to or claimed by this state or any of its departments, institutions, or agencies that may be made payable to or collectible by the department created by this act.”

• Gives the department the authority to assess and collect state tax taxes as well as other state debt.

• Defines enforcement powers and limits.

• Outlines the collection process.

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THE AUTHORIZED COLLECTION AGENCY FOR 19 STATE

DEPARTMENTS AND STATE OF MICHIGAN GOVERNMENT UNITS

STATE AGENCIES•Michigan Department of State

•Department of Agriculture

•Department of Corrections

•Department of Environmental Quality

•Department of Labor and Economic Growth

•Michigan Guaranty Agency (Student Loans)

•District Courts*

•Universities*

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INGREDIENTS TO SUCCESS

2003 Revenue Enhancement Initiative

•Replaced staff lost to “early out” retirement.•Added additional staff to strategic positions.•Legislative response to suggested changes.•Administrative response to suggested changes.

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MILESTONES• 1985 - Michigan Automated

Collection System (MACS) contract implemented for income tax collection. First call in February 1986.

• 1987 - State Agency accounts (including Student Loans) added to the system.

• 1994 - District Court accounts collected.

• 1997 - One Billionth dollar collected by MARCS (April 1st).

• 1997 - MARCS contract awarded (July 1st).

• 1999 - MARCS implemented (June 15th).

• 2006 – Two Billionth dollar collected by MARCS.

– Total Collections to Date: $2.3 Billion

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MICHIGAN DEPARTMENT OF TREASURY

COLLECTION DIVISIONORGANIZATIONAL STRUCTURE

Collection Division

Contracted Collection Agency

Central Office Operations

Field Collections

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TREASURY OPERATIONS

What is our approach to Collections? Informed MailingsTelephone Contact – Incoming/OutgoingInstallment Agreement and Monitoring SuccessEnforcement Action Quality Assurance

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CENTRAL OFFICE – CALL CENTER

• First Treasury Contact

• Mailings

• Triage of Information

• Installment Agreement

• Recommendation of Enforcement/Legal Action

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PRIVATE COLLECTION AGENCY

• Activity Monitored by State Personnel• Receives Calls• Generates Mailings• Skip Trace for Contact Information• Makes Calls - Call Campaigns• Recommendations for Legal/Enforcement Action

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TOOLS FOR SUCCESS

• Clear Informative Letters – Including Consequences

• Informative Call Scripts

• Brochures/Hand outs in Initial Mailings

• FAQ’s

• Quality Assurance

• Web Site

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WEB PAGE

www.michigan.gov/driverresponsibility

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REQUIREMENTS FOR AGENCY COLLECTION REFERRALS TO

TREASURY

• Debt must have been delinquent for at least 180 days.• Debt must be greater than $100.00.• Agency must afford the debtor due process appeal

privileges.

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DRIVER RESPONSIBILITY FEE

• Enacted by the Michigan Legislature in October 2003 to promote safer driving in Michigan.

• Public Act 165 of 2003Amended by Public Act 52 of 2004

• Driver code requires suspension of driver license when debt is delinquent.• The act targets drivers convicted of specific driving offenses.

– Examples of specific qualifying offenses • Driving while under the influence of drugs or alcohol• Driving on a suspended license • Driving with no proof of insurance

– The accumulation of seven or more points on their driving record.• Fee is in addition to any court imposed fines or penalties.

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MICHIGAN DEPARTMENT OF STATE AND THE MICHIGAN DEPARTMENT

OF TREASURY• Have partnered to administer the provisions of this

statute.• Michigan Department of Treasury is required to

assess , notify, and collect the fee from the driver.• Michigan Department of State notified of failure

to pay.• Michigan Department of State will suspend a

driver’s license for failure to pay the assessed fee.

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MICHIGAN DEPARTMENT OF STATE AND THE MICHIGAN DEPARTMENT

OF TREASURY• This fee is applicable to both residents and non-residents

of Michigan.

• This fee is assessed for two years.

• Fees range from $200.00 to $1,000.00.

• Installment agreements are acceptable for amounts over $500.00.

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INFORMATION PROCESSING ISSUES FOR DRIVER RESPONSIBILITY FEE

COLLECTIONS• Michigan Department of State and Treasury

maintain separate databases.• The Michigan Department of State system

contains driver information.• State Treasury Accounts Receivable System

contains financial detail information.• No financial information is exchanged.

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INFORMATION PROCESSING ISSUES FOR DRIVER RESPONSIBILITY FEE

COLLECTIONS• Necessary information is interfaced daily via mainframe to

mainframe electronic file transfer process.

• The Michigan Department of State sends new Driver Responsibility Fee debts to State Treasury Accounts Receivable System.

• State Treasury Accounts Receivable System sends status code updates to the Michigan Department of State to either allow or prevent suspension of a drivers license.

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RECORD STATE AGENCY COLLECTIONS FOR THE

MICHIGAN DEPARTMENT OF TREASURY

• FYE 2002 $25.06 million

• FYE 2003 $21.55 million 15% decrease

• FYE 2004 $31.97 million 48% increase

• FYE 2005 $66.97 million 109% increase

• FYTD 2006 $91.04 million 36% increase thru June

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STATE AGENCY and DRIVER RESPONSIBILITY FEE

COLLECTIONS

$1,000,000.00$3,000,000.00$5,000,000.00$7,000,000.00$9,000,000.00

$11,000,000.00$13,000,000.00$15,000,000.00$17,000,000.00

Oct

-03

Dec

-03

Feb

-04

Apr

-04

Jun-

04

Aug

-04

Oct

-04

Dec

-04

Feb

-05

Apr

-05

Jun-

05

Aug

-05

Oct

-05

Dec

-05

Feb

-06

Apr

-06

Jun-

06

All State Agency CollectionsDriver Responsibility Fee

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Tax and State Agency Collections

$1,000,000.00$11,000,000.00$21,000,000.00$31,000,000.00$41,000,000.00$51,000,000.00$61,000,000.00$71,000,000.00$81,000,000.00$91,000,000.00

TaxState AgencyTotal Collections

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• As of June 30, 2006 • over $367.5 Million assessed • over $148.0 Million collected

• 40% collection rate

• $100, 000, 000.00 in anticipated collections for fiscal year 2006, approximated

DRIVER RESPONSIBILTY FEE KEY POINTS

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www.michigan.gov/driverresponsibility

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CONVICTIONS AFFECTED BY DRIVER RESPONSIBILITY FEES

• No Proof of Insurance Convictions – Down 42% from 2002 totals

• Driving While License Expired Convictions

– Down 31% from 2002 totals

• Speeding Convictions

– Down 12% from 2002

•Disobeying Traffic Signals– Down 19% from 2002

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IMPLEMENTATION PROCESS

• Law went into effect October 1, 2003.

• First assessments issued February 2004.

• Processing is based on existing structures within each department.

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OBSTACLES AND CHALLENGES ENCOUNTERED

• Making necessary system changes. • Educating the public about the law.• Managing the public’s hostility towards no proof of

insurance provision.• Educating our staffs about the nuances of law.• Delineating areas of responsibility.• Managing increased workloads in both processing and

phone call volumes.• Legislation that affects administrative processing.

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COLLECTION DIVISION CONTACTS

• Michael Reynolds, Administrator

• Wilfred Smalls, Assistant Administrator

• Pamela Butler, Manager

• Aver Hamilton, Manager

• Kevin Olson, Manager

Phone: (517) 636-5300 Fax: (517) 636-5215