Sunday, April 20, 2014

Reclaiming Revenue: How Odyssey helps counties collect outstanding fines and court costs

May 6, 2013 by Mary L. DePrez

Each year, millions of dollars in fines and courts costs charged to defendants in Indiana’s courts go unpaid, often leaving courts and clerks with little recourse for collecting those debts. Some people simply forget that they got that speeding ticket; others cannot come up with the money to pay that fine on time; and others simply ignore the court’s order. Their lives go on, the fines and costs remain unpaid, the courts’ judgments remain unfulfilled, and resource-strapped counties forego needed services.

That is until 2011, when the Indiana Supreme Court partnered with several executive branch agencies to pilot a project using Indiana’s tax intercept statute by withholding a resident’s state tax refund until he or she (1) pays the unpaid court costs and fines or (2) uses the tax refund to pay the court costs and fines. It turns out this approach was not only successful at settling outstanding balances, it also proved to be a good customer service tool.

How it started

Indiana has long had in place statutory authority allowing the interception of state tax refunds for a number of reasons, including unpaid court costs and fines (See I.C. 6-8.1-9.5). During his 2010 State of the Judiciary address, then Chief Justice Randall T. Shepard told members of the Indiana General Assembly that Indiana’s trial courts were committed to helping the state‘s bottom line and would make every effort to collect outstanding fines and costs that are due on thousands—if not millions—of court cases.

The following day, the State Budget Director called Lilia Judson, Executive Director of the Division of State Court Administration (Division), excited to learn how the courts could collect outstanding fines and court costs and asked if any executive branch agencies could be of assistance. Although the Constitution provides that fines and forfeitures go to the common school fund, court costs are divided among cities, counties and multiple state funds, with the state general fund receiving the greatest percentages.

Though the tax intercept statute had never been utilized to collect outstanding court fees, the Division determined that this law allowed the collection of overdue fines and court costs in criminal and infraction cases. Because fines and costs in criminal cases are often included in the terms or conditions of probation and have a greater chance of being paid, the Division focused on infraction cases. Generally, these cases are related to traffic violations where the driver has failed to appear in court or failed to pay the ticket prior to the court date, resulting in a default judgment against the traffic violator. Such unpaid cases result in a suspension of driving privileges by the Bureau of Motor Vehicles (BMV).

The Division worked with the BMV, the Department of Revenue (DOR), the Budget Agency and the State Board of Accounts (SBA) to craft a plan to collect outstanding fines and costs under the authority of the tax intercept statute. Through a cooperative agreement, the SBA authorized the Division to collect these funds.

How it works

With the assistance of the BMV and DOR and using Odyssey (Indiana’s statewide case management system), the Division extracted a data file of all infraction cases that had a judgment entered, a balance due and a “failure to pay” event entered in the case. The following steps demonstrate the tax intercept process:

  1. An individual files his state tax return.
  2. DOR processes the return and generates a refund data file.
  3. The Division sends a data file from Odyssey to BMV and DOR weekly.
  4. BMV matches the file with the driver record; DOR matches the updated Odyssey file to the DOR refund file.
  5. The Division receives a file from DOR the following week with matches.
  6. The Division sends notice to the taxpayer with information regarding the specific case and the outstanding balance on that case.
  7. DOR holds the tax refund for 60 days so the taxpayer has an opportunity to appeal the intercept.
  8. If the taxpayer pays the outstanding balance to the court, the Division asks DOR to release the refund. But if after 60 days the outstanding balance remains unpaid, DOR officially intercepts the refund and transfers the refund to the Division.
  9. The Division forwards the entire refund to the court where the case was decided.
  10. The clerk applies the refund to the outstanding balance in Odyssey, which is configured to disseminate the receipts to the appropriate state, county and other special funds.

(Note: In Marion County, the refunds are applied to the cases through an automated interface to Odyssey.)

The Department of Revenue retains 15% of all refunds transmitted to the Division as allowed under the tax intercept law. This process runs weekly. Multiple agencies participate in the tax intercept process with DOR, and there are eight entities that have priority over court costs and fines, including the DOR itself, the Department of Child Services, Family and Social Services Administration, and the Department of Workforce Development.

How it’s going

The circuit court clerks in Floyd, Harrison and Monroe counties volunteered to pilot this new program. The pilots ran smoothly during 2011 and 2012, and the Division worked to streamline the process during that time. During the first two years, 340 taxpayers’ state tax refunds were intercepted resulting in a collection of $27,864 in fines and costs paid on 548 cases.

Interestingly, many individuals whose tax refunds were intercepted claimed to have forgotten about their tickets, but more importantly, they indicated that they did not know they were driving on suspended licenses. Several callers were thankful for the notice informing them of the license suspension. Many of these callers paid their tickets in full, resulting in the release of their refunds by DOR and court notifications to BMV to reinstate their driving privileges.

Once the pilot proved successful, it was time to try the program on a larger scale. Marion County has the busiest traffic court in the state—filing more than 140,000 new cases each year—and has been using Odyssey as its case management system since February 2009. With such a high volume of cases, the Division anticipated significant outstanding balances.

After running a test file, it turned out that over $10 million dollars in fines and costs were due on the Marion County unpaid cases.

The results have been outstanding. During 2013, over 10,000 taxpayers’ state tax refunds were intercepted through April 11th. To date, 2,174 cases have been paid in full, totaling $464,077. The Department of Revenue initially intercepted 10,590 taxpayer refunds, of which 2,245 were released, leaving $1,525,666 which has been applied to the outstanding balances on court cases.

Since its inception, the total amount recovered through this tax intercept project as of the middle of April equals $1,989,743. This amount was paid either directly to the pilot trial courts, because of the defendants receiving an intercept notice from the Division, or has been or will be paid to the courts from the intercepted tax refunds. However, this success did not happen without the Division committing a great deal of effort and resources. The Division received and had to respond to over 2,100 telephone calls from individuals inquiring about their court cases. The call volume necessitated expansion of our help desk services and the hiring of temporary staff to handle the call volume.

Although the Division has absorbed the cost of this pilot initiative within its trial court technology (JTAC) funding, the ongoing support of this program needs to be discussed with all participants and sustained funding needs to be secured. However, it is clear that the return on investment will be significant and that the state, the counties and the other recipients of court-generated fees stand to benefit enormously.

The tax intercept program is one of many initiatives that demonstrate the power and potential of the Odyssey case management system because of its single statewide database. Odyssey is made available to courts by the Indiana Supreme Court and is at the choice of the county.


Contact Mary DePrez at mdeprez@jtac.in.gov or 317-232-2542 for more information on this program.