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The state wants to make it easier to discover and garnish the bank accounts of taxpayers who owe it money by requiring banks and credit unions to turn over targeted customer information.
But legislation to match databases of tax delinquents with lists of bank-account holders is raising concerns that it could be a step toward Big Brother-like monitoring of finances that violate privacy or make it easier for anyone who is owed money to raid them.
Supporters say plenty of safeguards will prevent abuses.
Sen. Wayne Harper, R-Taylorsville, persuaded the Legislature's Revenue and Taxation Interim Committee last week to unanimously endorse his bill to automate the search for financial accounts of deadbeat taxpayers who have had judgment liens issued against them by a court. That preliminary OK means the measure can now go before the full Legislature in January without the usual requirement of a public hearing in committee.
Harper acknowledged the bill "is quite sensitive," but said it is needed to cut down on onerous paperwork and to help capture long-owed taxes.
State Tax Commission Chairman John Valentine said the current tax-debt-collection process is expensive and often unsuccessful.
He said the commission now uses available information to attempt to locate a delinquent taxpayer's account and sends the bank or credit union a 67-page garnishment document.
"Sometimes we guess right, and many times we don't," Valentine said, leaving millions of dollars in taxes uncollected. The request is time consuming for the bank even if the account holder in question isn't a customer.
"The tax commission is spending a significant amount of time sending out paper that is useless on fishing expeditions," he said. "We wasted the taxpayers' dollars. We wasted the bank's time."
Harper's bill proposes to create an electronic database of all delinquents who have liens, along with identifying information such as Social Security numbers. It would require banks and credit unions to search it once a quarter and notify the commission of any matches among their accounts.
The provided information would include the account holder's Social Security number, bank-account number, account balance and contact information.
The legislation would bar the bank from informing customers that it had turned over their account information to the state. It also would grant the bank immunity from liability.
"What this legislation allows us to do is narrow our scope of attack and go after those situations where we know there is an account in the bank and there is money in the account," said Dee Talbot, the tax commission's director of taxpayer services.
"We can attack those funds in a very expeditious way," he said, "and collect revenue while it is there."
Talbot said the database with delinquent taxpayers' information would be on a secure computer server and would affect a relatively small number of people who have a court-ordered judgment lien against them.
"We're not talking about everybody," Talbot said. "We're talking about those who really are the recalcitrant individuals who refuse to work with us, refuse to set up repayment agreements."
Valentine said Utah uses a similar system to collect child-support payments from deadbeat dads.
Committee members and others raised concerns about what Rep. Joel Briscoe, D-Salt Lake City, called potential "mission creep."
For example, Rep. Jon Stanard, R-St. George, asked if the government is allowed to use computer searches of bank accounts to collect state liens, why not also allow businesses to do the same thing against debtors?
"That's a good point. I actually wrestled with that one," Valentine said. But Harper said he is not willing to go that far with his bill, and wants close oversight to limit database matching and protection of personal data.
Scott Simpson, president of the Utah Credit Union Association, said while his group supports the bill to cut down on unnecessary paperwork, "it could cause a negative effect with customer relationships" from people worrying that their accounts could be accessed or searched by the government.
Sen. Howard Stephenson, R-Draper, asked Simpson whether it might lead some delinquent taxpayers and others to put their money in out-of-state or overseas institutions to avoid any possible seizure.
"I'm not an expert in breaking the law," Simpson replied, "so it would be irresponsible for me to speculate."
Valentine said 27 states already have similar data-matching systems, so moving accounts out of state is less of a threat.