Collecting On Delinquent Taxes Pays Off For Athens

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If not for delinquent city income taxes collected by the city of Cleveland, the city of Athens would be have been down $24,000 in income tax revenue as of the end of May.

Earlier this year, the city of Athens contracted with Central Collection Agency (the city of Cleveland) in order to find income taxes due to the city from the years 2006-2010.

As The Messenger previously reported, Athens City Auditor Kathy Hecht said that the city of Cleveland is the only municipality in the state of Ohio with access to confidential Internal Revenue Service federal income tax information. Only municipalities with more than 225,000 taxpayers can apply to get access to IRS records.

Hecht said the city of Athens was unable to find delinquent taxpayers on its own, so it contracted with CCA to compare federal tax return information to city income tax records. Those who were deemed to have either lived or worked in the Athens city limits on their federal tax return, but did not pay the 1.65 percent city income tax may have received an audit letter from CCA earlier this year.

In return for its services, CCA will take up to 5 percent of the collected income taxes. Hecht said since these are delinquent taxpayers the city would not have been able to find on its own, the service isn't actually costing the city anything.

According to Hecht, CCA has collected $100,000 in delinquent taxes for Athens so far that were owned for the years 2006-2010. She said an additional $70,000 in delinquent taxes were collected by her office by taxpayers who came forward to pay income taxes for 2011 and 2012.

Hecht said that CCA has also billed taxpayers for an additional $100,000 in delinquent taxes due to the city prior to 2011.

Those who were audited by CCA and have since paid their delinquent taxes will now be on the city's tax rolls, so they'll be required to file taxes with the city as long as they work or live in the city limits.

According to Hecht, at the end of May, income tax revenue for the city was up $146,000.

"If we hadn't collected that $170,000, we would have been down for the year at this time," she told The Messenger.

The city's contract with CCA will automatically renew this summer. Hecht told Athens City Council on Monday that she wants to keep the contract in place for at least one more year to see how much income tax revenue could be generated for the city. She added that CCA would only be looking for delinquent taxes for the year 2011 next year.

Income tax is the city's main source of revenue, but the city does not have mandatory filing. Hecht has said that mandatory income tax filing would require more work for city employees and would require many people to file who don't need to.

"It would really just turn out to be busy work," she said.