Electronic Payment Processing Tarrant County Tax Office

1. Electronic Payment ProcessingTarrant County Tax Office

2. Tarrant County Tax Office • Working with 1.75 million citizens • 181 employees in tax office • Eight locations county wide • Serving over 800,000 property accounts • Register about 1.5 million cars each year • Over $3 billion in tax collections each year • Over $300 million in motor vehicle collections per year • Answer over 35,000 calls per month

3. Tax Office Collections Property Tax & Motor Vehicle

4. Payment Options • Cash – Still a popular payment method • Checks – Traditional method favored by Seniors • Credit Cards – Growing but expensive • E checks (ACH) – fastest growth, favored by younger tax payer • CSR – Many like to talk to someone to pay • Next – Payments by Phone/PDA

5. Payments by Type

6. Why Did We Change? • Cash and checks are hard to handle • Buried in paper & old processes • Taxpayer wants it • Staff / budgets – more with less • Risks of handling millions of dollars • Bank requirements • I like being Tax Assessor / Collector

7. What Have We Done? 2001 – Credit cards on line 2002 – ACH transfers to pay entities 2003 – Lock Box with ARC 2004 – E-Checks on line 2007 – Hybrid ACH & Ck21 – the big one 2008 – Face to face credit cards 2010 – eLock Box for bank checks

8. What are theElectronic Deposit Options? • Account Receivable Conversion (ARC) – convert or truncate data on check to a data file & send to bank electronically • Image Cash Letter (ICL) – image check front & back to send to bank electronically; may be referred to as Check 21 • A combination or hybrid system – ARC & ICL

9. Electronic Check Deposits • You are going to need a scanner(s) • Verifying data is critical • Statement must provide notice • Scan check and data • Store paper checks • Destroy paper checks • Manage check images for office use

10. Hybrid Solution • ARC & ICL Combined • Image of check (front & back) is created • Check data obtained from check • Both files sent to bank • Bank determines if check can be sent as image or data file

11. ACH – Where did it start? • ACH - Automated Clearing House • - Electronic transfer of funds and information • - Idea started in early 1970s in California • NACHA - National Automated Clearing House Association, began in 1974 • - Oversee the ACH movement nationwide • - Regional Payment Associations oversee the ACH movement in their area (SWACHA)

12. Check 21 and September 11, 2001 • September 11, 2001, changed everything • On October 28, 2004, the Check Clearing for the 21st Century Act, more commonly known as Check 21, became law • Creates a legal equivalence of the original check and a substitute check • The Federal Reserve’s objectives: • Facilitate check truncation and promote the use of electronics • Foster innovation without mandating receipt of images • Improve overall efficiency of the nation’s payments systems

13. Check 21-ICL (Image Cash Letter) • Check processing & electronic transmission to collect instead of sending paper checks (cash letter) to the Fed or Clearing House • Checks are imaged; thus, checks are not returned to the customer from bank • If cancelled check is needed, bank can provide an image of the check • Check 21 is the check world, NOT to be confused with ACH

14. ACH - CHECK 21 Check conversion and check truncation —partners for the future ACH: ARC/POP/RCK Conversion Truncation Image Exchange: Substitute Checks • Check conversion transforms a check to electronic settlement - NACHA world • Check truncation transforms a check to an image-enabled electronic transaction for settlement - Check world

15. Substitute Check Overview • A substitute check is the legal equivalent of the original check for all purposes - Contains legible image of front and back of check - Conforms to industry standards (MICR, physical characteristics of check) - Includes all endorsements

16. Requirements • Notice must be provided prior to consumer writing check • Must provide opt-out option • Must be machine-read • Source document must be destroyed within 14 days • Retain copy of front of source document for two years

17. Benefits • Improved collections • Additional re-presentments • Faster notification of returns • Timing of payment can be selected • Reduction in costs • - Transport fees, lockbox locations, processing fees • - Image of check readily available

18. What Checks can be Converted? • Consumer size checks • $25,000 or less • Business size checks that do not have the auxiliary on-us field in MICR line • Contain a pre-printed serial or check number • Completed and signed by the customer • Bank can be a big part of managing this

19. Opt-Out Requirements • Consumer must have the ability to opt out • Consumer must tell company each time check is presented that they do not want their check converted • Company is not obligated to accept the check, can suggest alternative payment method • Opt out is good for one time only

20. Copy/Retention of Check • Company is required to retain a legible image or copy of the front of the check for two years • Company must use commercially reasonable methods to securely store - All checks until destruction - All related banking information • Note: there is no destruction requirement unlike the 14 days for ACH

21. How Will This Affect Customers? • Customers will see notices of check conversion at the point of sale • Funds may be debited from the check writer’s account more quickly than through a paper check clearing process • Your customers will see a description of the transaction on their bank statement indicating: - Your business’ name, check number, settlement date, amount • Customers will no longer receive a cancelled check back from their financial institution

22. Face to Face Debit/Credit Cards • Transaction posted to database • Check secured in cash drawer • Check is imaged & verified in back office • Transactions sent downtown to verify • Deposits sent to bank

23. Savings • Bank charges reduced • Deposit (float) earnings increased • Taxpayers checks processed quicker • Entities get their money faster • More personnel involved with error corrections • New equipment used by multiple departments

24. Selected Results

25. Any Office Can Do This • Even small – mid size tax office • Limited or no IT support can be resolved • Do your homework: analyze costs & benefits • Evaluate alternate solutions • Good partners are essential • Look to your bank for help • Make a plan to implement in logical steps • Involve commissioners, budget, auditors

26. Rear View Mirror • Next Generation expects it • Savings are significant • Security is greatly increased • Banking partner may demand it • Do you like your job?

27. Lessons Learned • Not for faint of heart • Business processes changed • Quality vendor partners essential • Involve all stake holders early • Never enough testing • Happy hour is good

28. Two Quotes • Only two things in life are certain, death and taxes, and death never gets worse. • INTAXICATION – Euphoria at getting a tax refund, which lasts until your realize it was your money to start with.