Mayor Nutter's Budget Update | Enhancing Efforts to Collect Delinquent Taxes

The City’s Revenue and Law departments are working together on an aggressive campaign to pursue tax delinquents by expanding existing efforts, starting new initiatives, and seeking new collection tools. The most visible part of this effort was launched in November 2008, when Mayor Nutter released the names of the top 50 business tax delinquents. Those delinquents owe the City in excess of $27 million.

Prior to posting this information, the Law Department sent letters to those against whom it has large judgments, notifying them of the intent to post their names and judgments if they do not pay or enter into agreements to pay the judgments against them. To date, the list has generated $1.4 million in payments and commitments to pay another $1.4 million from this initiative. The list, which appears on both the Law and Revenue Departments’ web sites, was updated in mid-March 2009 and has garnered significant media attention.

In the past few months, an emphasis has been placed on identifying non-filers of the parking tax. Investigators have been active in the area around the stadiums during games and events, and non-compliant operators have been contacted. Thus far new investigations have yielded $382,000 in assessments, and further enforcement efforts are ongoing.

In addition to publishing lists of business tax delinquents and expanding parking tax enforcement, the Departments have begun or enhanced several other initiatives to improve delinquent tax collections. The list includes:

Continue to post real estate tax delinquents' information on-line
Enhance audit functions by increasing audit staff, introducing correspondence audits and returning to travel audits
Match firms' wage tax and business location information against business privilege filings
Increase matching of City returns with federal tax returns, including expanding outreach to school income tax filers based on IRS dividend data
Expand the use of collection agencies for real estate and other taxes, water and sewer charges, certain Licenses & Inspections charges, nuisance violations, security alarm charges and, possibly, bail judgments
Support legislation to transfer payment of outside collection agencies' charges and fees from the City to delinquent taxpayers
Change City tax regulations to remove an exclusion from the business privilege tax for certain real estate entities (deemed REITs) and to clarify that business activities undertaken by non-profits are taxable
Expand the existing program to revoke existing business privilege licenses for non-payment of taxes
Improve public education and outreach to taxpayers through newsletters, website improvements, public service
Introduce a tax fraud hotline for individuals to report suspected fraud

Furthermore, the Departments plan to implement the following initiatives in FY10:

Increase tax payments by commercial vendors on nominally tax-exempt properties (properties leased from authorities or non-profits that are tax exempt)
Create an acceptable and defensible allocation formula to require visiting sports teams to pay media income for games played in Philadelphia