SALEM - City officials are proposing to offer city income tax evaders an opportunity for amnesty before using a proposed collection agency program to track them down.
The Finance Committee of City Council agreed Monday to recommend two different actions for city council to consider: one a resolution for the amnesty program proposed from Oct. 1 through Nov. 15; and one an ordinance to contract with the Central Collection Agency through the City of Cleveland Income Tax Department.
"We're excited about it," city Treasurer Bob Tullis told the committee.
Tullis and city income tax administrator Fred Pamer explained both programs to the three committee members and other council members and city officials who were present.
According to Tullis and Pamer, both programs would work on the goal of finding residents who should be paying income tax to the city but are not at this time for whatever reason, which could then increase the income tax revenue.
Under the amnesty program, city taxpayers who have a tax balance due from a previous year or have not filed and have been determined to owe taxes to the city would have the chance to pay the taxes and just half of the interest due for not paying on time. No penalties would be assessed during the amnesty period.
Tullis noted that senior citizens who live in the city who don't have earned income from W-2 wages, rental income, business income or lottery winnings have no tax liability. Income from Social Security, a pension or investment income is not considered taxable income by the city, but they must register and file at least one time with the income tax department for records purposes. All city residents 18 years or older are required to file with the income tax office even if they have no income.
Anyone with questions about whether they should register with the department or have a tax liability should call the department at 330-332-4241 Option 2.
For the collection proposal, Tullis and Pamer explained that CCA would compare the Salem taxpayer data base with
the IRS federal income tax data base to identify taxpayers with a Salem address living in the city who filed a federal return but have not filed with the city. CCA would also look for taxpayers who have underreported their Salem income and compare federal withholdings for Salem-based businesses to look for businesses that have not reported wages and withholding to the city.
CCA would pursue the filing of missing returns, billing of underpaid taxes and unreported withholding from local businesses, charging the city 5 percent of the total amount collected. There would be no upfront fees.
Committee Chair Councilman K. Bret Apple questioned whether the city could identify the delinquent accounts on its own, with Pamer saying the city is looking at this as a way to find people the city has no way to identify. The city does not have access to the federal data base due to the city's size, but the city of Cleveland does.
Pamer said they would be looking at past returns, while the city would continue identifying new taxpayers and taking the steps the city already takes to find people, such as when someone files for water service from the city. Councilman Dave Nestic, another member of the committee, expressed concern about duplicity, but was told CCA would have the city's data base for comparison and wouldn't be contacting people the city already knows about.
Committee member Councilman Brian Whitehill questioned what the advantage would be to having the amnesty program, asking if the city was giving more away through the amnesty program instead of just going straight to the collection program.
"We're trying to be nice," Nestic said.
Tullis said it's never their goal to punish but to get what is owed to the city. In the case of the collection program, the city doesn't know who hasn't been paying because they haven't been identified.
"These are tax dodgers. We don't have to be that nice," Whitehill said.
Councilman Jeff Cushman asked if they projected what the city might get from the program, but Pamer said they had no way of knowing. He said CCA secured about $100,000 for the city of Warren and identified about $58,000 for Athens.
The committee also agreed to recommend approval of an appropriation of up to $62,200 from capital improvements for the purchase of a new 1 1/2-ton Ford dump truck for the street department, with a determination to be made on whether the snow plow from the truck being replaced can be used on the new truck or sold for scrap to offset part of the cost of the new truck.
City Service/Safety Director Ken Kenst said the new truck will replace a 1997 1-ton dump truck with 103,000 miles on the odometer which needs $2,700 worth of repair work for the parts alone and has a driver side door that won't open from the inside. Kenst said they want to keep the old truck and use it for picking up limbs and other lighter duties until it dies. The truck can no longer be used for plowing snow due to transmission problems.
In action related to property, the committee recommended putting a small city-owned parcel on North Ellsworth Avenue up for bid that had been acquired through foreclosure and agreed to buy three more foreclosed upon properties for $2,054. Two of the parcels are at 150 E. Third St., each measuring 39 feet by 46.6 feet. The other parcel measuring 30 feet by 100 feet is located at 519 Columbia Street, with the idea to come up with a way to approach the neighbors about then acquiring the properties.
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