State tax collectors are backing off a controversial plan to get money from delinquent taxpayers. Officials in the Department of Revenue wanted to use new software to track down a delinquent taxpayer’s bank account to collect unpaid taxes. The Iowa Department of Revenue’s Victoria Daniels explains.

"It’s something that a lot of states are undertaking — different departments of revenue — on a local level and a national level as well," she says. "We estimate we could bring in $2 to 4 million by implementing this program."

But the banking industry objected and the department has asked legislators to dump a proposal that would have given the agency authority to use new software to tap into bank accounts to collect unpaid taxes.

Daniels says today, it pretty hard to track whether delinquent taxpayers have the money to pay their overdue taxes. "Right now the way we have to do it is a very manual process. We kind of have to guess on where someone might have an account based upon where they live or where they work or other factors," she says. "It would really increase our efficiency if we were able to have an automated data match with financial institutions."

Other states are using that kind of an electronic "data match" system and Daniels estimates her agency could collect up to four million dollars in delinquent state taxes with the system.