Tax Performance System

CHAPTER VI

COLLECTIONS

COMPONENTS

INTRODUCTION
COMPUTED MEASURES
PROGRAM REVIEW

INTRODUCTION

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INTRODUCTION

The Collections function consists of efforts to assist employers to comply with state laws and
regulations, promote voluntary payment compliance, collect past due amounts from
employers, and manage accounts receivable. The major tasks are:

Take action to collect past due payments
Suspend collection efforts on uncollectible amounts

PRIMARY OBJECTIVE

The primary objective of Collections is to promote payment compliance and manage accounts
receivable. To accomplish this objective, Collections will need to meet two sub-objectives:

1.

Increase the percentage of amounts due paid voluntarily (Completeness)

2.

Take all reasonable actions to manage accounts receivable (Timeliness and
Completeness)

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Timeliness
and
Completeness

CHAPTER SIX

INTRODUCTION

To assess state effectiveness in managing accounts receivable,
Computed Measures will be generated based on data routinely
reported by states. These elements will be converted into indicators
by the TPS ADP system.
To determine whether the state is taking all reasonable actions to collect
accounts receivable, a Program Review will be conducted to ascertain the
existence of necessary internal controls and to determine whether or not such
controls are functioning properly.

REVIEW METHODOLOGIES

Computed Measures

Computed Measures will provide indicators of state effectiveness in promoting payment compliance
and management of accounts receivable. Indicators measuring contributory employers will also be
used to measure reimbursing employers:

1.

Percent of amounts due paid timely

2.

Receivables declared uncollectible and/or ruled doubtful - The percent of
tax due declared uncollectible and/or ruled doubtful

3.

Accounts receivable at the end of the report period as a percent of tax due

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REVIEW METHODOLOGIES
Program Review
The Program Review to be conducted for Collections has two components - a Systems Review and
an Acceptance Sample.
The Systems Review covers the following topics:
Recorded Information and Instructions
Training
Recording of Transactions and Events
Execution By Authorized Individuals
Systems to Assure Execution of Events
Review of Completed Work
The Systems Review will be used to identify the internal controls and quality assurance systems
necessary for an effective Collections operation and to verify if the State has such controls in place.
The Acceptance Samples examine the following:
Employer Accounts Identified with Accounts Receivable
In conjunction with the Systems Review, Acceptance Samples of completed collection accounts will
be examined to confirm that States system of controls is ensuring its established procedures are
being followed.

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COMPUTED MEASURES

Computed Measures will provide indicators of state effectiveness in promoting payment compliance
and management of accounts receivable. These measures will be generated based on data elements
reported by states through routine quarterly reports. The TPS reviewer must ensure that the state
ADP system captures these data elements as defined so that the ADP system can produce output
reports based on these elements.
Whether the state accumulates the data elements required for Collections computed measures
through ADP or manually, it is important that the records be kept from the beginning. The data is
gathered from the system used to electronically report the current Form ETA 581 data. Appendix B
explains the technical process for gathering this information.

Collection Indicators (Contributory)
The indicators for contributing employers that measure how effective the state is in promoting
payment compliance and management of accounts receivable are described below:

1.

Percent of amounts due paid timely.

2.

Receivables declared uncollectible and/or ruled doubtful - The percent of tax
due declared uncollectible and/or ruled doubtful.

3.

Accounts receivable at the end of the report period as a percent of tax due.

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Collection Indicators (Reimbursing)
The indicators for reimbursing employers that measure how effective the state is in promoting
payment compliance and management of accounts receivable are described below:

1.

Percent of amounts due paid timely.

2.

Receivables declared uncollectible and/or ruled doubtful - The percent of tax
due declared uncollectible and/or ruled doubtful.

3.

Accounts receivable at the end of the report period as a percent of tax due.

The same computed measures will be used for each type of employer, contributory or
reimbursing.

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Indicator 1 - Amounts Paid Timely
(The percent of amounts due that were paid timely)
Rationale. This indicator measures the extent of employer voluntary payment compliance.
It is intended to provide a measure of state efforts to promote payment compliance through
effective publications/forms, educational programs and/or utilization of enforcement tools.
It also reflects the relative magnitude of non-compliance, and provides a perspective of how
much risk is involved.

Formula
Amounts Determined Receivable for four (581) report quarters.
Tax Due: Annual dollar Amounts Deposited plus Amounts
Determined Receivable minus Receivables Liquidated.

Example:

1,000,000 (Determined Receivable)
10,000,000 (Tax Due)

= 1 - 10% = 90%

Data Elements.
The Amounts Determined Receivable should result in the four quarter total of
amounts reported on ETA 581 #22 for contributory and on ETA 581 #34 for
reimbursing. The amount to be included is the amount of unpaid contributions
initially determined to be past due during the report quarter based on delinquent
contribution reports received, audit findings, legally collectible estimates and final
assessments. For reimbursable employers, the amount is the reimbursements initially
determined to be past due during the report quarter based on billings to reimbursing
employers which are unpaid.

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Tax Due is defined as the annual amounts of dollars deposited (ETA 2112 line 11 for
contributory and lines 18, 19, and 20 for reimbursable) plus Amounts Determined
Receivable (ETA 581 #22 for contributory, ETA 581 #34 for reimbursing) minus
Receivables Liquidated (ETA 581 #23 for contributory, ETA 581 #35 for
reimbursing). This formula is recommended because it provides a more consistent
and accurate picture year-to-year of amounts actually due than amounts reported as
due on ES 202 reports.

Indicator 2 - Receivables Declared Uncollectible.
(Percent of tax due declared uncollectible)

Rationale. While a low percentage of amounts declared uncollectible is desirable,
an increasing percentage may also be an important indicator of efforts to perfect
accounts receivable inventories and write-off amounts that states have no means of
collecting.
Formula

Receivables Declared Uncollectible and/or Ruled Doubtful for four (581) report quarters
Tax Due: Annual dollar Amounts Deposited plus Amounts
Determined Receivable minus Receivables Liquidated.

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Data Elements.

Receivables Declared Uncollectible include all amounts of past due contributions
for which the agency is no longer actively seeking collection. Such amounts have
been written off or moved to a suspense file and are not included in the active
accounts receivable file. The amounts to be included should be the sum of the four
quarters reported on ETA 581 #24 for contributory, and ETA 581 #36 for
reimbursing. Receivables Ruled Doubtful include all receivables reported on the
ETA 581 beyond two years. The amounts to be included should be the sum of the
four quarters reported on the ETA 581 #25 for contributory and ETA 581 #37 for
reimbursing.
Tax Due was previously defined and should be the same as for Indicator #1.

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COMPUTED MEASURES

Indicator 3 - Unpaid Contributions/Reimbursements Due.
(Percent of accounts receivable at end of the report period to tax due).
Rationale. This indicator provides a measure of overall compliance effectiveness. To
equitably assess the effectiveness of state compliance and collection efforts, a
comprehensive measure will contain the amount of past due dollars as they relate to the total
amount due. Long term trends due to the rise and fall in employment, wage base, and tax
rates all impact the size of accounts receivable. While the fluctuations of total amounts due
may be outside the state's control, the state is responsible for collecting the proportion of
dollars which becomes past due. This measure will indicate the true significance of a state's
accounts receivable by showing what proportion of tax is past due. Also, the rise and fall of
past due amounts can be better understood when reviewed in relation to the rise and fall of
total UI dollars due.
Formula

Tax Due:

Receivable Balance at end of (581) report quarter
Annual dollar Amounts Deposited plus Amounts Determined
Receivable minus Receivables Liquidated

Data Elements.
The Receivable Balance is the total amount on the ETA 581 report quarter ended date. The
amounts should be the same as reported on ETA 581 #26 for contributory and ETA 581 #38
for reimbursing employers.

Tax Due was previously defined, and should be the same amount as used for Indicators 1
and 2.

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COMPUTED MEASURES
The denominator for all accounts receivable indicators is recommended to be the most
recently completed calendar year tax due. The reasons follow:
The same denominator means all accounts receivable indicators are
comparable, both within a state as well as across states.
The indicator reports can be generated for any time period but it requires
FOUR (4) quarters.
"Drift" due to inflation, or the trend of decreasing effective tax rates which
reduces the amount of tax due is eliminated.
A more consistent picture of accounts receivable management is provided
from year-to-year.
Computations will be made annually by the National Office for each indicator, for both
contributory and reimbursable accounts receivable.
Drawing Conclusions.
An analysis of these results will provide an overview of how effectively the state is
managing its accounts receivable. Each of the indicators should be examined separately and
in relationship to the others. The TPS reviewer will find that a change in one indicator will
have a particular effect on another indicator (e.g., is a decrease in accounts receivable the
result of an increase in amounts written off or is that change reflected in amounts liquidated).
The TPS reviewer will determine from this analysis whether the state is effectively using the
collection tools at their disposal (e.g., if the turnover ratio is high does the sample reviewed
reflect timely contact of employers, are liens and enforced collection action being utilized?).
Findings or trends from Computed Measures should be considered with Systems Review
and Acceptance Sample findings in evaluating the effectiveness of the state's operation and
be included in the Annual Report.

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PROGRAM REVIEW
COMPONENTS
SYSTEMS REVIEW
ACCEPTANCE SAMPLES

SYSTEMS REVIEW

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PROGRAM REVIEW

SYSTEMS REVIEW INTERVIEW SHEET

Function

Reviewer

Persons Interviewed
Date

Name:

Documents Reviewed
Title:

Title:

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Recorded Information and Instructions
In the State Collections operations, procedures should be set forth for charging/non-charging
of penalties, enforced collection actions, stayed collection actions, and declaring accounts
uncollectible.

The reviewer should examine recorded instructions available to the staff and
compare procedures to the laws and written policies of the State to determine
if the recorded information and instructions are current, accurate, and
complete. The reviewer should also observe the Collections process and talk
with employees to learn whether or not the recorded instructions are
available and being used.

In the narrative section following the questions, explain any "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there are no
recorded instructions, describe in the narrative how the staff becomes aware
of the proper procedures to perform the tasks of the Collections function.

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SYSTEMS REVIEW QUESTIONS

1.

Does the State have recorded information and instructions to assist employees to perform
Collections functions?
Yes
No __

2.

If yes, are all the recorded information and instructions:
Yes No
a. Current?..............................................................................................................................
b. Accurate? ...........................................................................................................................
c. Complete? ..........................................................................................................................
d. Readily available to staff?..................................................................................................

VS:(Questions 1and 2

3.

)

If any of the preceding evaluative questions are answered "No", does the State have a
substitute or compensating control?
Yes

VS: (Question 3

No

N/A __
)

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SYSTEMS REVIEW NARRATIVE

Question
Number

Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)

Question
Number

Answers to "If yes, describe" and "Other":

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Training

New employees need to learn the State laws, written policies and procedures for collecting
account receivable, suspending collection actions when warranted, and for declaring certain
accounts uncollectible. Existing employees benefit from periodic refresher courses, and need
additional training when changes occur, and when quality defects or a significant number of
errors appear in a particular area.

The reviewer should respond to the following questions after discussing with
management the training methods and systems used to identify and meet the
Collections unit training needs.

In the narrative section following the questions, explain any "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there are no
formal training systems, then describe how the staff knows the laws and
written policies and the proper procedures to perform the Collections
function.

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SYSTEMS REVIEW QUESTIONS

1.

Does the State have methods or procedures to provide training for newly hired employees?
Yes
No __
*If yes, identify the type of training:
Yes No
a. *Formal Classroom Training? ...........................................................................................
b. *On the Job Training?........................................................................................................
c. *One-on-One Training? .....................................................................................................
d. *Individual Self-guided Training?.....................................................................................
e. *Other?...............................................................................................................................
Describe the type and frequency of training in the Narrative Section following these
questions.

2.

Does the State have methods or procedures to provide refresher training for experienced
employees?
Yes

No __

*If yes, identify the type of training:
Yes No
a. *Formal Classroom (e.g., refresher courses)?....................................................................
b. *On the Job Training?........................................................................................................
c. *One-on-One Training? .....................................................................................................
d. *Individual Self-guided Training?.....................................................................................
e. *Other?...............................................................................................................................
Describe the type and frequency of training in the Narrative Section following these
questions.

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3.

Does the State provide training when there are:
Yes No N/A
a. State law changes? ............................................................................................................
b. Policy/procedure changes? ...............................................................................................
c. Needs identified from review of finished work
(e.g., supervision, quality assurance
review)? .............................................................................................................................
d. Hardware/software changes? ............................................................................................
e. *Other?...............................................................................................................................

4.

Does the State have processes (e.g., back-up training or organizational flexibility) to assure
that staff absences will not disrupt operations?
Yes

No __

If yes, describe in the narrative.

VS: (Questions 1-4

)

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5.

*In the opinion of the supervisor or manager, does the training meet the needs of the
Collections function? (e.g., are sufficient resources available--training packages, facilities,
staff, etc.)
Yes

6.

No __

If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes

No

N/A __

If Yes, describe in the Narrative Section following these questions.

VS:(Question 6

)

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SYSTEMS REVIEW NARRATIVE

Question
Number

Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)

Question
Number

Answers to "If yes, describe" and "Other":

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Recording of Transactions and Events

The Collections function should have procedures and controls to assure that notifications,
enforced and/or stayed Collections actions such as lien filing, license revocation, attachments
of funds, seizure of assets, successor liability, employer prosecutions, and/or bankruptcy
actions are recorded and that the source information is readily available for examination.
Whether the State system is manual or automated, an audit trail should lead from the
Collections data recorded in the employer account record to the information source upon
which the Collection action was based.

The reviewer should become familiar with the various types of Collections
actions which require an audit trail leading to the supporting documentation.

In the narrative section following the questions, explain any "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If the State does not
maintain source documents or an audit trail, describe how it assures that
correct/appropriate Collections actions have been taken.

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SYSTEMS REVIEW QUESTIONS

1.

Does the State have methods to assure that enforced and/or stayed collection actions can be
traced to their source (e.g., request to take enforced action, letter of appeal, notice of
bankruptcy)?
Yes
No ___

2.

Can the following be identified through the audit trail:
a.
b.
c.
d.

3.

Yes No
Employer notification(s)? ..........................................................................................
Amount(s) included in tax liens? ...............................................................................
Enforced and/or stayed Collections actions? .............................................................
Date(s) of Collections actions? ..................................................................................

Are original and amended information sources, including electronic source documentation,
retained and accessible for State use?
Yes

VS:(Questions 1 – 3

No__

)

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If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes
No
N/A __

If Yes, describe in the Narrative Section following these questions.

VS:(Question 4

)

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SYSTEMS REVIEW NARRATIVE

Question
Number

Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)

Question
Number

Answers to "If yes, describe" and "Other":

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Execution by Authorized Individuals

The Collections function should have systems procedures or internal controls to assure that
determinations for charging/non-charging of penalties, adjustments to receivable amounts,
enforced and/or stayed collection actions are taken by authorized individuals.

The reviewer must become familiar with the manner in which authority is
restricted and responsibility assigned to Collection staff members.

In the narrative section following the questions, explain any "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If the State does not
require authorization for adjustments to accounts and/or initiation of enforced
collection actions, and waivers of penalties, etc., describe how it prevents
inaccurate/inappropriate actions.

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SYSTEMS REVIEW QUESTIONS

1.

Is authorization restricted to certain designated individuals for:
a.
b.
c.
d.
e.
f.

Yes No N/A
Penalty waivers? ........................................................................................................
Adjustments of amount due? .....................................................................................
Enforced collection actions?......................................................................................
Classification to stayed? ............................................................................................
Classification to uncollectible?
*Other?.......................................................................................................................

VS:(Question 1

2.

)

If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes

No

N/A __

If Yes, describe in the Narrative Section following these questions.

VS:(Question 2

)

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Question
Number

Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)

Question
Number

Answers to "If yes, describe" and "Other":

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Systems to Assure Execution of Events

For Collections, controls should be in place to assure that cases are assigned and worked
according to State priorities and procedures, liens are filed timely and accurately, other
enforced collections actions are taken properly, stayed collection actions are handled correctly,
and cases meeting appropriate criteria are declared uncollectible.

The reviewer must determine if such program management systems have
been built into the Collections operation, and become familiar with
automated and/or manual controls which assure collection actions are
properly taken.

In the narrative section following the questions, explain any "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If the State does not
have internal controls or safeguards, describe how it assures the
appropriateness of collection actions.

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1.

Does the State have systems procedures for:
Yes No
a.
b.
c.
d.
e.

Tracking case assignments?.......................................................................................
Controlling lien filing dates? .....................................................................................
Monitoring collection activity, i.e.,
identifying cases with minimal/no activity? ..............................................................
Controlling installment payment plans? ....................................................................
Ensuring that collection results (i.e.,
adjustments, changes, etc.) are posted
properly to the employers account file?.....................................................................

VS:(Question 1

2.

)

If procedures are automated, is a systems check performed every time a program is
changed?

Yes __ No __ N/A__

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3.

Are Bankruptcy cases controlled to assure:
Yes No
a.
b.
c.

Claims are filed accurately and timely?.....................................................................
Are those employers continuing in business
monitored to ensure payments are made timely?.......................................................
Unpaid cases are reassigned for appropriate
collection action upon bankruptcy closing? ..............................................................

VS:(Question 3

4.

)

If any of the preceding evaluative questions were answered "No", does the State have a
substitute or compensating control?
Yes

No

N/A __

If Yes, describe in the Narrative Section following these questions.

VS: (Question 4

)

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Question
Number

Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)

Question
Number

Answers to "If yes, describe" and "Other":

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Review of Completed Work

For the Collections function, the State should be conducting systematic review of collections
cases. The information received and the action taken should be checked against the
information recorded in the employer's account. A review of completed work should be done
on a regular basis for all staff members involved in the collections operations. This review
may be done on an individual basis for each staff member, or by sampling work done
throughout the entire unit. The following questions are designed to determine how these
reviews are conducted.

The reviewer must become familiar with the kind of review program the
State uses to assess the work performed by the Collections function.

In the narrative section following the questions, explain any "Other"
responses, and describe "Compensating Controls". Identify the question
being explained by referencing the number and section. If there is no
supervisory and/or quality assurance review, describe how quality is assured
in the Collections unit.

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For staff members involved in the Collections process, are the following components subject to some form of systematic review. For Yes
answers, enter a "Y" in the appropriate column(s). For Yes answers, also enter "Y" in column 6. If there are no reviews, answer "N" for
No in column 6. Column 6 is the only evaluative question.
Type of review
Component

*1
Supv

*2
Peer

*3
QR
(QualRev)

a.

That the employer is being contacted timely?

b.

That a history of collection activities is being maintained?

c.

That State collection enforcement tools are being
appropriately utilized?

d.

That liens and enforced collection actions are filed properly
against the correct ownership structure (i.e., sole proprietor,
partnership, corporation)?

e.

That specific requests (e.g., the filing of liens, employer
account updates, written requests for collection assistance,
etc.) are acted upon timely?

f.

When the debt is satisfied, there is a review to ensure the
release of the enforced collection action?

VS:

(Question 6

* Informational

*4
Support
(Clerical)

*5
Other

6
Review
Conducted

)

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7.

If any of the preceding evaluative questions are answered "No" does the State have a
substitute or compensating control?
Yes

VS: (Question 7

No

N/A __

)

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SYSTEMS REVIEW NARRATIVE

Question
Number

Explanation of "N/A" and "Compensating Controls"
(when deemed necessary)

Question
Number

Answers to "If yes, describe" and "Other":

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ADDITIONAL CONTROLS

1.

*Does the State have internal controls or quality assurance systems in the Collections
function that this review failed to identify?

Yes

No __

Yes

No __

If yes, describe below:

2.

Are there any exemplary practices for the Collections function?

If yes, describe below:

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PROGRAM REVIEW

ACCEPTANCE SAMPLE INSTRUCTIONS

Purpose/Intent

To assure that Accounts Receivable are being managed in
accordance with State's established procedures.

Scope

The scope of the review will focus on collection cases of
$100.00 or more which are more than 30 days old. Day 1 of
the 30 day count can begin the day after the account
receivable was established. Do not include accounts
declared legally uncollectible.

Universe

The universe for the Collections Acceptance Sample will
include:

Timing/Frequency

1.

Accounts that have been established for at least 30
days. (See Note above.)

2.

All accounts with $100.00 or more in unpaid UI tax
(or the State's established benchmark figure, if
higher). This universe should be identified between
February 1 and June 30.

3.

Select 60 cases, or if universe is small, select the
number of cases based on Table in Appendix A-III

The sample will be selected once per calendar year.
The population should be identified any day in the period
between February 1 and June 30 (a single snapshot of the day
selected).

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ACCEPTANCE SAMPLE INSTRUCTIONS

Sampling Procedures

The following steps must be taken to establish the universe
and to select the sample accounts:

1.

Identify the universe of all employer account
receivables over 30 days old with tax due in the
amount of 100.00 or more (or the State's established
benchmark, if higher). Rounding up or down is
permitted. The debt (or a portion) should have been
created in the past two calendar years or less. This
universe should be identified between February 1 and
June 30.

2.

In order to give the State time to follow its collections
procedures, select the sample of 60 cases six months
after identifying the universe.

3.

Any case that was a part of the previous years'
sample, whether passed or failed, must be replaced for
the current review. However, if new debt had been
created since the previous year’s snapshot date, the
case can remain in the sample.

4.

The review should be completed no later than March
31 of the following year.

If the system is automated, the Reviewer must work closely
with the ADP unit to ensure a concise understanding of what,
when and how the samples should be selected.
Appendix A describes what action needs to be taken for
sampling in both manual and automated systems.

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CHAPTER SIX

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ACCEPTANCE SAMPLE INSTRUCTIONS
Reviewing Samples

Assemble the following information from the employer's
account:
1.

All information the State has in its possession relating
to the collection history of the selected account
including copies of liens, enforced collection action
and other supporting documents.

2.

The employer account information on the State's
computer files.

Review actions taken with the preceding 2 calendar years
plus current year only.
Review timeliness of contacts for most recent quarter of
liability only. The “most recent quarter” is the most recent
quarter of liability preceding the “snapshot date” (any day
between February 1 and June 30 of the year under review).
If multiple receivables have been established during the
preceding 2 calendar years and current year time frame;
review actions taken and resolutions applied towards the most
recently established receivables. (Up to a maximum of the
ten most recently established receivables are to be reviewed.)
When full payment is received, further review of collection
action may be necessary to see if any enforced collection
action was properly released.
Uncollectible accounts will be reviewed up to the point they
are declared uncollectible, and to determine if they are
properly written off.
Accounts in bankruptcy status will be reviewed up to the
point where a claim is filed in bankruptcy court, unless the
bankruptcy already been discharged or closed. (Question #8)

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CHAPTER SIX

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ACCEPTANCE SAMPLE INSTRUCTIONS
Drawing Conclusions

Using this information, answer the questions on the Acceptance
Sample Questionnaire.
The following questions are evaluative:
#1.
#2.
#3.
#4.
#5.
#5a.
#6.
#6a.
#7
#8.
#10.

Is the account correctly classified.
Were successor liability procedures followed.
Were initial written notices sent timely.
Was the employer contacted other than through initial
written notice.
Was an assessment filed properly.
If yes, was the employer properly notified.
Was a lien(s) filed properly.
If yes, was the employer properly notified
Were other actions taken properly.
Was a proof of claim filed timely if employer was in
bankruptcy.
Was enforced collection action properly released.

A "NO" answer to any evaluative question must result in
failure of the sampled case.
The following questions are non-evaluative:
#4a.
#4b.
#4c.
#4d.
#9.

Was telephone contact made after written notice was
mailed.
Was the employer contacted in person.
Was the employer contacted by mail.
Other contacts.
Were any payments received.

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CHAPTER SIX

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ACCEPTANCE SAMPLE INSTRUCTIONS

Drawing Conclusions
cont
A "NO" answer to any evaluative question for a collection
sample case will mean that the State's rules and procedures
were not followed, and the case will not be considered
acceptable.
If the completed review of 60 Acceptance Sample cases
includes three or more unacceptable cases, then the reviewer
must conclude that employer accounts receivables are not
being managed in accordance with State's established
procedures.
For each unacceptable case, the reviewer must provide an
explanation on the Acceptance Sample Explanation Sheet.
Questions that can be answered INA require attention. See
"NOTE".

Documentation

All source documentation gathered to review samples must be
kept until the completion and Regional Office approval of the
Annual Report. Either hard copy documentation or (in some
highly automated systems) the ability to recreate the identical
information used in the review must be maintained.

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ACCEPTANCE SAMPLE INSTRUCTIONS

NOTE: States provide a full range of collection techniques to be used by State staff "as
appropriate", and it may be difficult for a reviewer to determine whether the staff made the correct
judgment about which technique to use. In addition, actions necessary to collect vary with the
amount of indebtedness and the willingness/ability of the debtors to pay. The reviewer must
recognize the discretion that is given to professional staff in making decisions on the appropriate
tool to use. The reviewer should give the benefit of the doubt to the decision made unless the record
is clear that the decision is in violation of the State's procedures. If the case warranted an enforced
action and one was taken within the State's guidelines, then the objective of the question is satisfied
and the reviewer should answer "yes" to the question.
The reviewer will need to exercise care in answering Acceptance Sample questions N/A. The State's
established written procedures are the primary control in determining whether the case fails or
passes the review. The case is to be reviewed against State collection procedures through the point
where money is received.
If for example a payment was received after only one phone call and no enforced collection action
was necessary, the subsequent Acceptance Sample question dealing with assessment, liens, enforced
actions and bankruptcy can be answered N/A. However, if State procedures call for a certain action
to take place after a specific number of days regardless if payment is made, the reviewer must
determine if this procedure was followed.
There may be situations where the documentation is not clear cut enough to warrant a "Yes" answer.
It is the responsibility of the reviewer when answering questions "INA" to make a determination if
that action did occur based on circumstantial facts or evidence. If such evidence does not convince
the reviewer the answer should be "No".
If the Account Receivable, identified in the universe, was set up in error and was subsequently
determined not to be an accounts receivable, the reviewer should answer question # 1 "No" and not
answer the rest of the questions. (The A/S case would fail.) However, if at the time of the review,
the Account Receivable which was set up in error had been determined not to be a receivable, and
the error was corrected due to the State's own controls in finding the error and not due to the
employer bringing it to their attention, the case should not fail, and Question 1 would be answered
“Yes”.

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ACCEPTANCE SAMPLE QUESTIONNAIRE
Identification

1.

At the time of review was the account correctly classified
"uncollectible", "liquidated" or in "bankruptcy status")?

(e.g., "collectible",

Yes

2.

No __

If there was a successor, were successor liability procedures followed?
Yes

No

N/A __

Notification

3.

Were initial written notice(s) and follow up notices sent timely for the most recent quarter of
liability?
Yes

4.

No

N/A

INA __

Was the employer contacted other than through the "initial written notice" for the most
recent quarter of liability?
Yes

No

N/A __

If yes :
Yes No N/A INA
a.

Were telephone contact(s) made?

b.

Was the employer contacted in person?

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ACCEPTANCE SAMPLE QUESTIONNAIRE
Notification cont.
Yes No N/A INA
c.

Was the employer contacted by mail?

d.

Other contact(s)? If yes, describe
on sample explanation sheet.

Actions Taken
5.

Was an assessment(s) filed properly?
a. If filed, was the employer properly notified?

Yes
Yes

No
No

N/A __
N/A __

6.

Was a lien filed properly?
a. If filed, was the employer properly notified?

Yes
Yes

No
No

N/A __
N/A __

7.

Were any other enforcement actions taken properly?

Yes

No

N/A __

If the employer has filed a petition for bankruptcy, were
appropriate actions taken to file a claim?
Yes

No

N/A __

8.

Resolution
9.

Did the State receive any payments for the receivables or adjustments to
the receivables under review?
Yes

10.

If enforced collection action (including, but not limited to tax liens)
was initiated, was that properly released in accordance with State
policy and procedures?
No
Yes

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TAX PERFORMANCE SYSTEM
Collections Sampling Coding Sheet
State: _________

Period Covered: ______________

Date: ________________

Reviewer: ____________________

(6 months prior to review)

Case
#

Employer
Id.
Number

Tot.
Amt Due

# Qtrs
w/Liab

1

2

3

4

4a

4b

4c

4d

5

5a

6

6a

.

Questions 1, 2, 3, 4, 5, 5a, 6, 6a, 7, 8, and 10 are evaluative.

Total Acceptable _______ of _______

7

8

9

10

Pass/Fail
Y/N

Page _______ of _______

TAX PERFORMANCE SYSTEM

Collections - Sample Explanation Sheet
State: _____________________ Period Covered: _______________ Date: _______________ Reviewer: _______________
Sample Type:
Case
Number

Employer
Identification Number

Acceptance

Expanded
Explanation