cases financial ruin resulted from Carol's visit. The Employment Security agency escaped none of the disruptive effects of the hurricane, but at the same time it had a rare opportunity to demonstrate its capacity to rise to the demands of a major emergency. The failure of power, light, and telephone service at the height of the storm left the agency's central and local offices without any of these essential operating facilities. All electrically operated equipment was rendered useless and communication between the units of the agency and outside points was all but impossible.

The Providence local office especially felt the full brunt of the storm and the consequent flooding of the downtown area of the city. A foretaste of what was to follow came about 10:15 a. m. when a large plate glass window on the first floor blew in. This contributed to the total damage sustained, since winds of gale force sent rain and salt spray over a large working area.

When the office was notified- -none too soon- -that water might flood the building, we immediately took steps to assure the safety of essential records, including application files, job order files, and claims records. necessary to maintain uninterrupted placement and benefit payment operations. At approximately 11:15 a. m. water and swirling spray began to enter the building and finally rose to a depth of 18 inches inside the office. The flood waters did not begin to recede until after 1 o'clock that afternoon. (All through this

time the streets in the area seemed more like canals than highways.)

Although the damage to equipment and supplies in the local office was extensive, no financial or other important records were lost. A serious inconvenience resulted from the temporary halt in the payment of benefit claims, but the afternoon of the hurricane was the only time that claimants were turned away, as all efforts were made to restore such essential operations with the least possible delay.

Despite the serious crippling of its physical facilities, the Employment Security agency managed to resume the more urgent phases of its regular operations and to do its share in the common task of restoring order in the community. Even before Hurricane Carol had disappeared, the agency's offices throughout the State began contacting employers, governmental and private, to offer assistance in meeting needs for workers to repair the damage. Where telephone service was out of order, the Employment Service staff contacted employers in person. As a result, a large number of critically needed workers were placed in emergency employment throughout the State.

While flood waters still rose on the first floor of the Providence local office and its staff huddled for protection on the upper floors, first steps were taken to meet the emergency. Radio announcements directed to employers were prepared, stating that the Department of Employment Security was still in business.

and that job orders would be accepted for emergency workers as needed. Other announcements were prepared for broadcast to workers available for salvage work and for restoration of service and facilities. These announcements were on the air by 4 o'clock that afternoon and were repeated at frequent intervals. Since no electricity was available anywhere in the area, these broadcasts could be heard only by persons owning battery sets or automobile radios.

As the flood waters receded, the entire janitorial staff of the big building in which the Administrative and Providence local offices were located began mopping-up operations which continued throughout the night.

The Morning After

The next morning was bright and sunny and a full appraisal of the damage could be made. There were no lights; only two telephones could be used for outgoing calls and no incoming calls could be received. Communication was the big problem. Despite many transportation difficulties, practically the entire staff reported for work in the local office.

In response to the radio announcements for salvage workers, about 50 applicants had gathered outside the building before the office was officially open for business, but no employer orders for workers could come in by telephone. A task force was quickly' organized to make personal contact with employers and labor union representatives to determine their worker needs. Each member of this force, equipped with job order blanks, was made responsible for a specific geographical area.

Meanwhile, the Providence office prepared to operate under emergency conditions. Desks and counters were placed near windows for better light and reception and waiting space for applicants was set up. An order-control system was started and all employer orders which resulted from the hurricane were prefixed with an "X" and a particular number.

The first results of our efforts occurred at 9:30 that morning, when an employer came into the office in search of electrical workers. Four interviewers were assigned to assist him conduct positive recruitment there in the office. By 10 o'clock he had hired 26 men and transported them by trucks to places of work.

Throughout the morning the field force returned to the office with job orders they had obtained from employers. In most cases, it was possible to make prompt referral from the qualified applicants who reported to the office in increasing numbers.

In the first days following the hurricane, we found that many employers were using their own workers in recovery efforts, waiting to have their cellars pumped out, or waiting for insurance appraisals before beginning salvage operations. The result was that while the Employment Service was ready to make applicant referrals and applicants continued to visit the office, employers were not ready to utilize the service offered them. However, the need for carpenters, roofers, electricians, and helpers in those

Shops along Westminster Street in Providence were severely damaged by hurricane-caused flood waters. The plank in the foreground is lodged against the top of a submerged automobile. classifications was immediate and continuing. Due to the scarcity of fully qualified workers, it was easier to fill openings for helpers. But several out-of-State craftsmen reported and were placed in jobs.

As water was pumped from cellars in the downtown area, orders began to come in from hotels, theaters, and wholesale houses for men to clear away debris, repair damage, or install new facilities.

On the third day after the hurricane, a U. S. Army generator truck restored lights to a limited degree in the Providence local office. Each day more telephones were put back in operation. By the last week in September, conditions could once more be considered normal.

In the period just before the hurricane struck the area, Rhode Island business and employment levels were recovering from the prolonged slump which dated back to the fall of 1953. Unemployment and benefit claims had begun to decline. The hurricane abruptly reversed this trend. Practically all business and industrial activity came to a standstill. More than 100,000 workers in the State were idled for periods ranging from 1 to 4 weeks.

Initial claims, which for the 3 weeks preceding the storm had averaged 2,650 per week, shot up to an average of nearly 10,500 for the 2 weeks following Carol's visit. Of 20,066 initial claims filed in the 2-week period ending September 10, 14,800 were determined to be due to the hurricane.

It is estimated that "hurricane claims" cost the

Rhode Island employment security fund about $211,000 more than would have been disbursed had normal conditions prevailed for the 3-week period ending September 24. This unfortunate added cost came during a year when the benefit fund had already been subject to the heaviest monthly outlays since the recession of 1949.

As workers returned to employment before dates assigned for filing claims for waiting period credit or unemployment insurance payments, the offices in Providence and Pawtucket reorganized their schedules and remained open evenings to service these workers.

Hurricane "Carol" was followed in less than 2 weeks by "Edna" and shortly after by "Hazel." The lesson left for Rhode Island was that this State, along with others in the danger zones, must learn to live with hurricanes. The ravaging experience with "Carol" bore fruit in more adequate preparation and safeguards made for the visit by "Edna." When the alert was given for the scheduled arrival of “Edna,” ground-floor windows in all downtown buildings in Providence, including the quarters of the Department of Employment Security, were boarded up or otherwise made secure and sandbags were piled up all around to keep out flood waters. Agency records were moved to the second floor of the building. Even more thorough preparations were made for receiving "Hazel."

The later hurricanes gave Rhode Island only a

glancing blow and caused relatively little damage. But they have served to keep the State on its toes against what now appears to be the increasing probability of future hurricanes. A great deal of study is being given to the problem of how Rhode Island can protect itself against this menace, and a number of proposals have already been set forth, such as the building of dikes, seawalls, and other barriers along the more vulnerable points.

As part of this overall hurricane defense question, the Department of Employment Security has been giving some thought to how it can secure its own safety and continuation of operations in the event of future hurricanes.

While no decisions have yet been reached, a tentative plan of defense has been considered which would be integrated with any eventual community program of security. Such a plan would include the following major phases:

1. Immediate steps to be taken when alerted for hurricane to protect records and safeguard personnel. 2. The salvaging and restoring of property and equipment.

3. The resumption of claims payment service and accelerated placement efforts to meet the emergency, having in mind the disruption of community services and the urgent need to restore normal conditions as quickly as possible.

NOMMERCIAL business establishments are con

COM

cerned with production problems and keeping costs of production low enough to make the price of their products competitive. In cases where production is not involved, the problem boils down to proper buying of the commodity to be sold, or in a service organization, proper selection of services to be rendered. Business firms are also confronted with sales and distribution problems, and the departments handling these activities must be equally efficient if the product or service to be sold is placed on the market in sufficient volume to realize a profit.

After problems of production and distribution have been solved, the problem of collecting accounts receivable must be met. It is obvious that business

organizations which properly produce and distribute have not accomplished much if excessive amounts have to be charged off for bad debts or remain in the accounts receivable column for an unduly long period. This explains the fact that in most successful business ventures one finds capable personnel in the credit department.

In administering any tax law, we find a similar fundamental division of activity. In our case, the liability and status work in the field and in the Central Office are comparable to the production or selling stage in a business enterprise. However, instead of producing and marketing our commodity, our accounts receivable are based upon the provisions of State laws. It is our responsibility to find and de

velop the accounts, determine where and to what extent liability exists, and to establish this information as a matter of record.

Impartial Collection Policy

All deputies, at a very early date, become liability conscious; most of us, when a firm's name is mentioned, immediately think of it in terms of "liable” or "nonliable." This field force does an excellent job in finding liability through various sources and in making careful and diligent liability investigations with strict impartiality.

The question arises whether a field deputy is as conscientious in doing as thorough a job in the collection end of the tax administration as in the finding of liability. There are several reasons why a deputy's collection work may not be as effective as his status work. First, there is a time element in the course of a deputy's routine field work. Numerous cases require a large amount of time. To do a thorough collection job places a greater number of cases in this category, with the result that it is easy to develop a tendency to give collections a rather casual handling. Second, there is the fact that collection work frequently has some unpleasant aspects; in some cases it is unpleasant in all its aspects. Third, it is perhaps easier to postpone an honest-to-goodness collection effort until the next collection stage is reached; namely, the lien or warrant stage. Fourth, in a few cases, it is possible that maximum collection effort may be postponed with the expectation that someone else may be as-. signed the task.

It is essential to the equitable administration of any tax law that all accounts receivable should be collected with the same degree of impartiality shown in originally determining tax liability. In the case of the UI tax laws, the tax is one which is levied when the employment conditions prescribed by the law are met. It is not a tax levied upon income or profits, or upon financial ability to pay. If tax collection efforts are not realistic and sound and followed through with impartiality, the end result will be an unfair business practice under which certain employers will have an advantage over other employers.

We all realize the inherent dangers connected with relaxing an impartial collection policy because an employer offers a story of financial troubles as a reason for nonpayment of taxes. Every effort must be made to avoid the granting of special consideration in such instances, since the end result would be to weaken the entire collection policy and procedure in favor of a few employers and to penalize the majority of employers who pay their accounts when due.

Timing Tax Collections

Action on unemployment compensation tax collection should start at the time the employer is determined liable and should be a definite part of the liability interview. However, sometimes it is not known at the time of the initial investigation what determination will result. While there are some cases

of liability finding where the tax is not yet due or deliquent, it is usually only a short time until it will be due. The employer will therefore benefit by being thoroughly acquainted with the method of tax computation, the amount of the tax, and the due date. If the tax is already due, the interest and penalty provisions should be explained. A straightforward and frank discussion with a responsible member of the firm at that time will go a long way in preventing future collection difficulties.

A deputy who finds liability should not feel that his investigation is complete until the subjects of complete reports and tax collections have been discussed and definite arrangements made for securing both the reports and the money. An employer forms his first impression of the organization with which he is dealing during the initial interview. If you were an employer and I were to advise you that you had met liability conditions under the unemployment compensation law and that you should now send in your reports and tax payments to Tallahassee as soon as convenient, you would have the impression that getting the reports and tax payments in by a specified date was not too urgent. If it were not convenient, you probably would not send a check with the reports.

Exact Explanation Helps

If, on the other hand, I explain exactly what you are required to do and point out that failure to comply with regulations will result in penalties and interest accruals as well as the issuance and filing of a lien against your real and personal property, you will get the impression that you owe this tax and that you had better do something about it.

When a lien is issued, a deputy has an excellent chance of securing collection by very positive handling at the time the employer is contacted. If the deputy contacts the owner or a responsible member of the firm and points out that he feels this matter is of sufficient importance to bring it to his personal attention, it will tend to impress the importance of the lien on the employer. It is in order to point out to the employer the present and future bad effects of a lien on his business and to mention the fact that even after the lien is satisfied it is still a matter of public record. This is an excellent time for the deputy to point out that the employer might as well clear the matter up now.

In many cases a warrant is issued in the Central Office and submitted to the deputy in the same mail with the lien. In any event, the warrant will not be far behind the lien and this should be pointed out to the employer. It should be made plain to him that the period of relief he would gain by permitting a lien to be filed would be very short.

Last but not least is the importance of prompt lien filing. This is not unreasonable since the employer is delinquent on taxes of which the Central Office has knowledge and well advanced in the accrual of another quarter of which the Central Office does not have knowledge of amount at the time the lien is

issued. The employer has had several notices in connection with the delinquency, during which period he should have been making arrangements for payment. It is my belief that in at least 95 percent of the cases where an employer waits until a lien is issued to start his arrangements for raising the money, he is taking advantage of the situation.

Further, I think it is good business to have the lien on record during the interim while an employer is paying his indebtedness through an approved installment plan, because at best, any deferred arrangement on payment is merely a promise to pay until the last payment is in. I believe that an employer feels his full responsibility under the arrangement if there is a lien on record against him, to say nothing of the added protection the fund receives by having established a prior claim on his assets.

The situation which necessitated liens against an employer frequently results in the sale of property and the placing of mortgages and other encumbrances against assets. The chronological position of our lien on the record, in a great many cases, has much to do with our success in making part or full collection under a warrant action.

In checking the lien record in Miami, I have found a number of cases where a matter of 1 or 2 days' difference in the filing of our lien would have resulted in collection. Frequently, the filing of some other lien prior to ours meant that levy under a tax warrant was useless, since the assets had already been encumbered in an amount equal to, or in excess of, sale value of total assets. In two cases, we were successful in collecting substantial amounts where the lien filing time was in our favor by 2 hours.

When an account has become so delinquent that a lien has been issued, we should take a positive position with respect to collection; continued controversy and negotiation at that point tend to weaken the effectiveness of the entire procedure. If an employer has been able to postpone payment in spite of several notices and contacts and is able to secure a deferment in lien filing, I feel that we have led him to believe that he can reasonably expect a half-hearted enforcement program at the warrant stage.

Last Chance to Collect

At the issuance of a warrant, every effort should be made to collect, as this is our last good chance to do so. At the time this contact is made, the deputy should have knowledge of the employer's assets and the liens against those assets. This includes information furnished by the Central Office on motor-vehicle equipment along with the warrant. It is often possible to secure additional up-to-date information in this respect, by local inquiry.

The status of real property can be determined by inquiry at the tax assessor's office and from mortgages on file. Accounts receivable are of considerable interest and this is the time for a frank discussion with the employer as to his receivables and his prospects for working out his situation. I have made use of

this information for only a short time, but I find that it has long been the practice of the Internal Revenue Department to demand and obtain from a delinquent employer a notarized or certified financial statement. This is also the time to review old office files on this employer since the files may contain useful information in dealing with the present situation. The files may indicate that this particular employer has been willing to enter into arrangements in past cases but did not carry them out, or that payments were made more or less regularly, after many follow-ups by the deputy, but that there was a high incidence of bad checks. These matters are properly brought to the employer's attention at this time, with the explanation that the initial payment must be as high as possible and the balance should be paid promptly.

Scheduling Deferred Payments

Full payment, or quick retirement of the balance, is important for several reasons. First, you have less followup, and the employer pays less interest. By the time you set up a deferred-payment schedule on the warrant, the employer may actually already be delinquent another quarter. A high initial payment will greatly enhance the chances of full collection on the warrant, and in many cases, by indication on the deputy's part that it is expected, arrangements can be made to secure the balance in 30 to 60 days.

Since working on warrants, I have sought full payment, or very high initial payment, and short-term extensions. I am continually amazed at the number of cases where full collection can be made on demand and the high percentage of cases where from 35 to 50 percent in initial payment is collected, with the balance in 3 to 5 months.

The actual arrangements to be worked out depend, of course, on factors other than the deputy's views and wishes in the matter. While I have completely abandoned the old "15 percent and the balance in 8 months" schedule, I have settled for a lesser scale in For example, if the man does not have anything and cannot get anything, I will agree with him that a small and extended arrangement is reasonable. On the other hand, scheduling warrant payments on a lax basis places a premium on delinquency.

some cases.

I want every employer to feel that I have been fair with him and courteous to him, and have made the best effort possible to understand his problem, but at the same time was firm in my demands consistent with the requirements of my job. I feel that I have been unsuccessful if the employer does not try to get the matter cleared up before it reaches me for delinquent handling. I do not want him to take the attitude that he will let the matter slide until a warrant is issued and then work it out.

In setting up a deferred payment schedule it is imperative that the employer thoroughly understand that the arrangement entered into is contingent upon all payment for current quarters being met. This frequently makes it advisable to ascertain from the employer what additional tax had accrued, over and