The Law Offices of Ronald P. Slates, P.C.
A Proffessional Corporation est 1980

One state's government efforts to collect from nonprofits

California is not the only state that is dealing with debtors trying to skip out on what they owe. One other state has even taken the measure of setting up its own Office of Debt Recovery in an effort to get back millions of dollars that was paid out.

This particular state provided taxpayer money to nonprofit organizations in return for these organizations complying with conditions set by the state. However, the state claims that at least 36 of these organizations did not comply with state financial reporting requirements and therefore should repay the state the money that was borrowed to them.

One of these nonprofit organizations received $325,000 from that state. Still another received $350,000 and one received as much as $550,000 in taxpayer money.

These organizations have until the end of August to comply with these requirements or then face collection efforts by the Office of Debt Recovery. However, it is unclear when the actual collection efforts will begin if the August deadline is not met. One official is hopeful that efforts will begin before the end of 2013.

As attorneys we understand that debt collection is a difficult and vital task. For example, the above matter demonstrates how some organizations have attempted to avoid paying back money that was provided by taxpayers and there are hopes that debt collection efforts can bring in $200 million over five years. Yet though it is recognized that there is a need to have this money paid back, there does not yet seem to be a clear plan put in place as to how to go about collecting the debts.

It requires a certain amount of expertise to make certain debt collection activities are done correctly. Especially in the commercial area we are speaking of at times of millions of dollars owed.

Source: Miami Herald, "Treasurer to refer nonprofits for debt collection," Melinda Deslate, July 29, 2013