RDS In The Media
Revenue Discovery eyes growth - across state line
Birmingham Business Journal - March 16, 2007 by Tiffany Ray Staff
In 18 months, Revenue Discovery Systems, the company formerly known as RDS Inc., has tracked own $6 million in unpaid taxes and fees in Alabama that local governments didn't know they were missing.
Now, the company is taking the division out of state as part of its fast growth into new markets around the country.
RDS, which long has provided tax administration and auditing services for city and county governments in Alabama, two years ago set in motion plans to expand on those existing services by cross-checking data from various sources to locate unpaid taxes and fees flying under the radar of government officials.
David MacLeod, vice president of sales and business development for RDS, said the new service has been a relatively easy sell because it is entirely results-based. Clients pay no fee; instead, RDS retains a percentage of every dollar recovered. "If we're successful, then we're successful together," he said.
The company has recovered more than $500,000 in unpaid business license taxes for the city of Bessemer alone after discovering more than 1,800 noncompliant licenses, according to RDS.
Ryan O. Rancher, senior revenue examiner for Bessemer, said money recovered by RDS is put into the city's general fund, which pays for salaries, public service and day-to-day operations. He said the Bessemer City Council recently approved a 5 percent pay raise for city employees that took effect this month and, "I'm sure (the recovered money) helped in terms of making that a possibility."
Walker County Administrator Jill Farris said the extra revenue RDS recovered there in undetected and unpaid business license fees "really gave us a boost."
In its deal with the county, RDS retained 50 percent of the money it recovered, Farris said. Still, the county's portion totaled nearly $100,000, and the county will get 100 percent of the renewal fees that result from the work, she said. "That's where your profit comes in."
The county provided RDS with databases of information on business license fees, sales and other taxes, and the company cross-referenced them to find discrepancies - companies that had paid sales taxes, for example, that did not appear to be paying business license fees.
It's not a task the county easily could have handled in-house, Farris said. "The county doesn't have that kind of manpower to do that kind of cross-reference."
Farris, who has worked for the county since 2003, said RDS was the first company to offer such a service during her tenure. The contract with RDS, like all contracts with the county, required approval from the county commission, but its results-based structure meant that no budget amendment was required to allocate money to the service.
Farris said the amount of money recovered by RDS did not come as a surprise. "I wasn't surprised because I knew there were funds out there that weren't being remitted but very pleased that they were able to recover it."
MacLeod said identifying unpaid taxes for smaller governments sometimes is more lucrative than work for larger ones because they have fewer resources in place to collect and monitor money owed to them.
"In many cases it's been a nice little windfall of cash for them," MacLeod said.