Diligence is paying off, says administrator
City tax sleuths cross-check city, state and employer records.
WARREN -- The city has been working aggressively to identify people who should be paying city income tax and to collect what they owe.
"When John and I came in here four years ago, part of our plan was being more aggressive in collecting delinquent accounts," said Thomas J. Gaffney, tax administrator, who was hired by city Treasurer John B. Taylor.
The result has been a 51 percent increase in the number of individual taxpayers from November 2001 to December 2004, according to the 2004 annual report from the treasurer's office. Individual taxpayers are self-employed people and others whose city income tax isn't withheld from their paychecks.
"We do a lot of cross-checking," said Gaffney, a certified public accountant and former internal audit director for Portage County.
Gaffney's staff checks state records for people in Warren ZIP codes who filed a state income tax return but not a city income tax return, and makes sure they then file a city return and pay what they owe.
The first year Gaffney's office checked state tax records, it collected almost $500,000 in city income tax from that effort alone, Gaffney said.
Last year, Gaffney's office began checking Ohio Lottery Commission records to make sure winners pay what they owe to the city.
The city tax department also identifies those who should pay city income tax by checking city water department billing records.
It also asks employers not only for W-2 forms showing employees' wages, but also for 1099 forms showing miscellaneous income they paid independent contractors.
Beginning this year, city taxpayers have been required to submit a copy of the first page of their IRS 1040 form with their city income tax returns to ascertain that all earned income is reported on the city return.
One of the first things Taylor and Gaffney did when they took office was to obtain a list of all physicians with hospital privileges in Warren, a revenue source that previously wasn't aggressively pursued, Gaffney said.
Some physicians then had to file five years worth of city tax returns, Gaffney said, adding that his office is now pursuing lawyers who may owe city income tax.
A sign on the tax department's wall says interest on unpaid city income tax is calculated at 18 percent annually on all unpaid balances.
But the tax department's ultimate weapon is prosecuting tax delinquents criminally in municipal court, where a judge can block the deadbeats' driver's license and registration renewals, Gaffney said. "It works very well," he said of the license and registration blocking strategy.
Every Wednesday afternoon is set aside in municipal court by Magistrate Dan Gerin for tax cases. Most of the tax cases are dismissed by the time they get to the pre-trial stage "because people have taken care of their obligations," Gaffney reported.
Gaffney said he recalls only two people who were jailed for nonpayment of city income tax in the past two years, and both had other outstanding legal issues.
Last year, more than 1,000 failure-to-pay cases were filed in Warren Municipal Court, according to the city income tax department's annual report.
Besides Taylor and Gaffney, the tax department consists of three investigators, two cashier-auditors and a clerk-typist.
One investigator specializes in pursuing contractors, subcontractors and self-employed people. Another checks state income tax forms and utility accounts.
The third investigator specializes in withholding accounts involving wage-earners, making sure employers withhold the correct amounts and file W-2 and 1099 forms.
"Our intention is to collect what the citizens of the community are owed," Taylor said. "We have a responsibility to those good folks in our community -- the vast majority of them that pay their taxes gladly and promptly."