Springfield and several other Illinois municipalities have opted to work with third-party vendors to track uncollected taxes and other revenue that is owed to them.

To encourage these business relations, which can be more cost-effective, state Sen. Michael Hastings, D-Tinley Park, has introduced legislation to allow municipalities to share sensitive financial data with third-party contractors.

“We don’t want to limit business with third parties who use this information to determine what a town is entitled to,” Hastings said. “(Alternatives) could cause villages to increase staff or go to another agency, which could be a longer process and cost more.”

Current law allows only certain city employees to have access to financial information from taxpayers, such as taxpayer identification numbers.

The Illinois Department of Revenue is concerned that companies, especially those that operate on contingency — meaning their fee is based on how much they collect — won’t adhere to state and local privacy standards if they are granted access to financial data, which could pose risks such as identity theft and fraud.

To prevent misuse, the legislation provides that third parties must:

* Enter into a confidentiality agreement with the Department of Revenue prior to receiving any information;

* Have an existing contract with the municipality prior to the agreement; and

* Abide by the same conditions as the municipality in terms of possessing the information.

In a position statement against Senate Bill 2933, the Department of Revenue argues that the business model for companies operating for profit is incentivized to extract the highest dollar possible, which could lead to inflated or incorrect assessments that would tie up limited agency staff resources. Business contracts could also interfere with the department’s ability to obtain federal tax information from the Internal Revenue Service, the statement says.

Read more at The State Journal-Register.