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RDS helps collect tax due governments

Once small firm, now operates in 6 states

Tuesday, May 22, 2007
CHARLES R. McCAULEY
Birmingham News staff writer

A couple of years ago, RDS, Inc. was a small Birmingham business working on revenue collections for government agencies around Alabama.

Now the pioneer in electronic tax filing operates as RDS, short for Revenue Discovery Systems, in Alabama, Tennessee, Georgia, West Virginia, Virginia, Louisiana and Puerto Rico. It still focuses on helping government collect tax money.

The expansion has benefited the bottom line, as RDS has seen profit grow 1,100 percent, while revenue has risen 400 percent.

President Kennon Walthall attributes much of the progress to support from Portfolio Recovery Associates, a Norfolk, Va., collector of defaulted payments to financial institutions and other businesses that bought RDS in 2005 for $17.5 million.

The growth has meant additional jobs. In 2002, Walthall's company had 20 employees. That swelled to about 80 in 2005, and today there are more than 100.

"We're trying to be at 130 by the end of the year," Walthall said.

To accommodate the growth, RDS has settled into the former American Red Cross garage at 2317 Third Ave. North, across from the former Jimmie Hale Mission. It is leasing space in the 16,000-square-foot building from developers Evergreen Real Estate.

"Being here gives us room to grow, but being a part of PRA has allowed us to much more rapidly go into these other states," Walthall said.

The company moved from what he described as a "chopped up, blocky little office" at 3001 Second Ave. South. Walthall said it was important to the company to stay in downtown Birmingham and show its support for the city center.

"The success of this region, and Alabama for that matter, is largely dependent upon how well Birmingham does."

In 2002, Walthall bought RDS with his father, Lee Walthall, and Morris Hackney and Steven Morris. Morris remains with the company, but Lee Walthall and Hackney left after the buyout.

The company began looking to acquire other companies, but it ended up getting acquired itself. Since then, Portfolio has given information technology, legal and human resources support.

"The management team ... has been just incredibly supportive ... in helping us grow and think outside the box," he said.

The mission has stayed mainly the same. RDS creates partnerships to help city, county or state revenue agencies process taxes and fees, find late-payment money and help audit revenue sources.

"Our clients are governments. We help them raise revenue, not taxes," he said. "There's so much money out there that people don't pay or they underpay or they don't even know to pay."

RDS workers handle sales and service calls and chores such as auditing, debt discovery and recovery services. Walthall said certified public accountants and former state and local government auditors perform audits.

Seventy Alabama cities use RDS - the old name is still used inside the state - to process their business license applications. Some filings are done electronically, but "we process tens of thousands of paper forms every month," Walthall said.

The company has 55 auditors who go around the country to audit the books of out-of-state companies that do business in Alabama. They check to make sure businesses are filing the correct amounts of sales, occupational, tobacco, alcohol and other taxes.

"One of the biggest areas we are in is called discovery and recovery," he said. In Fulton County, Ga., for example, RDS is using data mining technology to find who hasn't paid a license fee.

"We always had good technology, but now we have cutting-edge stuff," Walthall said. "It makes us very effective."

© 2007 The Birmingham News. All rights reserved.
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