Athens, Cleveland Join Together to Catch Tax Evaders
The ordinance follows a presentation by Athens City Auditor Kathy Hecht and Athens City Income Tax Administrator Tina Timberman at the city committee meeting last Monday, where they discussed a program designed by the Central Collections Agency (CCA) that would pursue non-filing taxpayers through the utilization of federal IRS records.
“[The ordinance] allows for the organization to enter into a contract so we can utilize federal databases that [the CCA] has access to, to find people who aren’t paying their taxes,” said At-Large Rep. Chris Knisely.
In addition to the authorization by the City of Cleveland being of the best interest for the city, the ordinance also states:
“Such administration and collection shall be restricted to delinquency issues referred to the City of Cleveland by the City of Athens, including collection of outstanding balances and pursuit of non-filed tax returns and other delinquency programs as agreed to between the City of Cleveland and the City of Athens.”
Hecht said that the program would be used to identify taxpayers that they don’t know of to capture a new revenue source, though they are familiar with 98 to 99 percent of the collection rate of city taxpayers.
In order to locate non-filing taxpayers, all taxpayers would be contacted by the CCA via letters. Businesses that are reporting withholding federally, but not locally; $10,000 or more in wages that are reported federally but no local returns are filed and under-reporting are all parameters Athens will be looking at in order to determine if a letter should be sent.
Although a small percentage of people are targeted, the program could bring in a substantial amount of revenue for the city. Hecht said when she came into office, the department got help from Athens City Law Director Pat Lang in identifying delinquent taxpayers, bringing in over $100,000.
In order to use the program, an administrative fee ranging from two to four percent of what is collected from the database would be charged to the City of Athens. Hecht mentioned that the percentage of the fee is relatively standard.
In regards to the aforementioned balances and tax returns, the City of Athens is allowing a 30-day amnesty period beginning on June 1. During this time, the city will waive any penalty charges in order to help a new taxpayer come into compliance, allowing them the opportunity to become penalty-free before the CCA program goes active.
The CCA, a non-profit organization based in Cleveland, is an agency for the Dayton area and over 50 other member communities in the State of Ohio, including Akron, Lima and Troy. The CCA contracts out of its participating cities to perform income tax collection and collects over $400 million on an annual basis.
Hecht believes that it would be cheaper for a two-person tax department to perform the income tax collection, providing more “flexibility” to work with the citizens, as opposed to contracting out of the state.
During the last council meeting, Hecht mentioned that the CCA does not give them any information until they are sure that a person owes city income tax.
“Once it comes to us, it is totally confidential,” she said.
Hecht will be authorized and directed to enter into an agreement for the Central Collection of Municipal Income Tax to allow the City of Cleveland to act as an agent for the purpose of administering income tax laws, collecting income tax due and owing of the City of Athens, according to Section I of the ordinance.
The ordinance has not yet been approved, and will continue to make its way through council until an adoption has been finalized. Upon its passage, it will be put into effect the earliest moment permitted by law.Share