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Unpaid city income taxes creating revenue

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It seems that “all’s well that ends well” following an auditor’s report to city council during Monday’s meeting regarding the city deal previously made with an income tax collecting company from Cleveland.

The city of Athens made a deal with the Central Collection Agency (CCA) early in 2012 to utilize its expertise to collect city income tax from residents who had not paid or were unaware they owed money to the city. The city of Cleveland is specifically privy to IRS tax returns due to the larger population of the city.

To get the attention of those who owed money through the years of 2006 through 2010, the city sent out letters earlier this year warning residents of the possibility.

“Most of them (city residents) did not realize we had a city income tax that they need to pay,” Hecht said. “But once people realized they should have been paying for those years, several of them, quite a few of them, came in and paid for 2011 and 2012 in our office so that they could be caught up.”

The in-house collections requiring people to come forward resulted in $82,000 in owed money found since the letters were sent.

Along with the money received came a larger number of taxpayer accounts. The city now recognizes 200 more taxpayers than in the years before the partnership with CCA, according to Hecht.

The revenue the city will receive is $273,000 from the CCA collections alone. Meanwhile, the total amount of money collected totals $325,000.

Fifty thousand of the total amount collected came to the city during through an amnesty period offered by the Auditor’s Office. Residents had one month to come forward and pay before further fees were applied to the taxes owed.

The success of the program was not lost on the Auditor’s Office.

“Now that we are three quarters of the way through the year I wanted you to see where we are on our collections and we are really right on target, you know, very close to 75 percent of what we projected,” Hecht said to council members.

The CCA is able to rise above the barriers blocking most cities from getting information on residents who owe income tax because of Cleveland’s population. Normally, it is nearly impossible for cities with a population under 250,000 to have access to IRS records. So, with its access, the city of Cleveland provides its services and charges a three to five percent fee. The fee for Athens was taken off of the top of the $325,000 total.

The Auditor’s Office, though pleased with the results of its work with the CCA, warned council members not to get too comfortable with the high numbers.

“Our actual tax revenue would not be where it is without that (the CCA),” Hecht said. “While we have these 200 new accounts, moving forward we won’t get the bump five years worth of taxes at a time from most of them.”

As far as the debt goes and the recent government shutdown, the city of Athens receives a “good interest rate,” according to Hecht, from a local bank, but is unsure of loans needed from outside the city.

“Moving forward, any new loans we get outside our local loans, I’m just not sure,” Hecht said. “In a lot of ways Athens is insulated from things like that.”

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