Rule approved to add on fees to delinquent taxes
4/11/2007Sylvania residents who play hardball with the city over income tax payments could soon find the city playing hardball with them in the form of hefty collection fees.
Legislation approved by Sylvania City Council calls for administrative fees equal to 35 percent of the delinquent amount to be tacked onto accounts that have been assigned to a collection agency.
That means $350 for every $1,000 in delinquent income taxes, unless payment plans were arranged before the account was sent out to a collection agency.
Mayor Craig Stough said the city wants to avoid the cost of collection agencies itself.
Residents and business owners who fall behind in their tax payments can avoid the fee if they arrange payment plans.
The city, though, is getting tough with those who have their accounts assigned to a collection agency. That's because the collection costs can exceed the amount of money due.
Angela Kuhn, commissioner of the city's division of taxation, said the city can't afford to incur collection expenses.
A change in state law about a year ago allows cities to pass along collection fees. "A lot of cities are looking into it," she said.
"We didn't implement it right away. We've been in discussions about it for several months," she added.
The change, she said, is a way for the division of taxation to be "responsible to taxpayers as a whole."
Although Sylvania typically sends a few cases to collection each month, the city doesn't have nearly as many delinquent accounts as other communities, Ms. Kuhn said.
It usually waits three or four months before sending delinquent accounts out for collection, she said.
"We are very lucky in the city of Sylvania. We do not have a lot of delinquencies," Ms. Kuhn said.
In the past, if the city sent a $1,000 overdue income tax case to an attorney for collection and the taxpayer agreed to pay the amount, the city would only receive roughly $650 of that $1,000.
The remainder, or about $350, would be paid to the attorney by the city as a collection fee.
The city, at the expense of other taxpayers, was picking up the cost, Ms. Kuhn said.
Currently, about 40 to 50 people are delinquent to the point of sending their accounts to collection; those numbers represent about four months worth of cases.
A total of $14,000 to $15,000 in delinquent taxes are due, Ms. Kuhn said.