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SALEM -- The city is considering contracting its delinquent income tax collection through the Regional Income Tax Agency (RITA).
The city currently collects delinquent income tax through the Auditor of State's office, which collects the outstanding balance from the delinquent taxpayers' state income tax return each year until it is paid off. The city initially chose this method over collection through RITA as it was believed that the auditor's fee of 10% of the collected balance was passed on the taxpayer so that the city would receive the full balance; however, in a meeting of the finance committee Tuesday City Treasurer Todd Mumpire said that he had learned that fee was taken out of the outstanding balance, cutting into the city's collection.
Mumpire suggested that the city instead shift its delinquent income tax collection to RITA, which already manages the rest of the city's income tax collection and already identifies delinquent taxpayers for the city and sends letters notifying them that they need to file their city income tax; however, that is currently where the process stops. Mumpire said that if the city switched its delinquent tax collection to RITA it could then pursue those outstanding balances through the civil court on the city's behalf, offering more options to ensure the balance is collected, including placing a lien on the taxpayer's property or garnishing their wages.
RITA Government Liaison Claudiu Cioates said that, as with the city's income tax collections, RITA would withhold 3% of the delinquent tax collected before calculating their actual cost at the end of the year, dividing it evenly between all participating municipalities and reimburse the city for the difference. Ciotes said that there would also be an initial retainer fee of $3,000 which would be withheld from one of the city's income tax revenue disbursements to cover the costs of attorney fees. Once they begin filing civil cases for outstanding balances those costs will be incorporated into their court costs, which are passed on to the delinquent taxpayer, to refill that pot.
The committee ultimately voted unanimously to have City Law Director Brooke Zellers draft an ordinance permitting Mumpire to enter a contract for delinquent tax collection with RITA.