1-time amnesty planned on delinquent city taxes

6/14/2007

The city of Toledo will offer a one-time amnesty to allow delinquent taxpayers a chance to pay their city tax with no penalty, Mayor Carty Finkbeiner announced yesterday.

The mayor said legislation has been submitted to council to allow suspension of the normal penalties and interest on delinquent income tax accounts for a 60-day or 90-day period this fall. The exact dates haven't been determined.

"It's a good opportunity for citizens to get caught up on their arrearage to the city," Mr. Finkbeiner said. "This is probably the only time they're going to get this opportunity."

It's also an opportunity for the city to replenish its coffers.

The city's general operating fund is facing a deficit of up to $17 million in 2008. The 2.25-percent tax on wages and business profits is the general fund's main revenue source.

Mr. Finkbeiner said the city has not offered tax amnesty in the past.

"After the period expires, all bets are off, and the city will pursue tax delinquencies and collect interest and penalties as allowed by law," the mayor said.

Clarence Coleman, the commissioner of taxation, said Toledo has $17 million in uncollected income taxes dating back to 1971. He said $8 million of that is in the last five years.

He said the average unpaid account is about $800.

Mr. Coleman said new tax records supplied by the U.S. Internal Revenue Service, beginning in 2001, have provided the city new information about taxes owed and not paid. That program is called STAX, for State Tax Audit Compliance. He said Louisville, Cincinnati, and Akron have operated tax amnesty programs.

He said the department expects to collect at least $500,000 through the program. The city files between 25 and 40 new tax suits weekly in Toledo Municipal Court, Finance Director John Sherburne said.

Mr. Coleman said he believes there are delinquent taxpayers who want to settle their debt with the city but are avoiding it because of the cost of the assessment for late-paid taxes.

The city charges a penalty of 5 1/2 percent a month for the first five months of delinquency, and 2 percent a month thereafter.

Mr. Coleman said the city will hire a contractor to run the amnesty program.

This year, the city Department of Finance was authorized to hire three tax auditors with the sole purpose of scrutinizing federal income tax records for unpaid city taxes.

Mr. Sherburne said those auditors are expected to generate $500,000 in previously undeclared tax revenue.

Contact Tom Troy at:

tomtroy@theblade.com

or 419-724-6058.