RDS lauded by many, sued by some

He wants to hire it to collect the city's sales taxes.
Tulsa World
Tuesday, June 29, 2010
Randy Krehbiel

The company that Mayor Dewey Bartlett wants to hire to collect Tulsa's city sales tax seems to receive generally good marks in at least two states where it does business, although some taxpayers complain that it is too aggressive and others don't like the idea of a private company having access to businesses' financial records.

"Nothing we've seen looked like they've done anything wrong or unprofessional in any way," said Jeff Kros, legislative director of the Arizona League of Cities and Towns, about Revenue Discovery Systems of Birmingham, Ala.

RDS — which began life as AlaTax — administers sales- and use-tax collections in Alabama for more than 200 municipalities and 40 counties with relatively few complaints from its clients. It is even listed as a recommended vendor by the Alabama League of Municipalities.

"The best I can tell, they do a pretty good job," said the league's deputy general counsel, Lori Lein. "Of course, I've heard pros and cons."

Some of the cons have to do with RDS' parent, Portfolio Recovery Associates. The high-pressure, bad-debt collection company was sued last year by Missouri Attorney General Chris Koster, who accused it of trying to collect debts no longer owed.

Complaints against RDS do not seem to have risen to that intensity, although some taxpayers charge that it has been overzealous and unfair.

RDS provides a variety of services, including sales- and use-tax collections, to local governments in Georgia, Tennessee, Kentucky, Mississippi and Louisiana, as well.

In Alabama and Arizona, municipalities are responsible for collecting their local taxes, although the state governments of each can handle the job.

Larger cities in Arizona collect their own taxes, but the smaller ones have generally relied on the Arizona Department of Revenue, an agency similar to the Oklahoma Tax Commission.

Kros said layoffs in the Department of Revenue have left it unable to serve local governments adequately — a complaint similar to what Bartlett's chief of staff, Terry Simonson, said last week about the Oklahoma Tax Commission.

RDS' biggest Arizona client to date is Bullhead City, a town of about 40,000 people on the Colorado River.

Local officials appear happy enough with the arrangement, but Kros' league dropped its affiliation with RDS when critics accused the league of taking "kickbacks" for directing business to RDS.

Kros said the money involved was insignificant and not a factor in the league's support of RDS. Nevertheless, the Arizona Tax Research Association pushed unsuccessfully this spring for a ban of the use of companies such as RDS.

In Alabama, where municipalities have a long history of handling their tax collections, RDS was named in a class-action lawsuit in November.

The suit charges that RDS' contracts violate the state constitution and a state ban of the use of "tax bounty hunters."

Original Print Headline: Firm touted by Bartlett seems clean