State Government News
Revenue Begins
Listing Tax Deadbeats on the Web
By Steve Tuttle
The
state’s new push to collect tens of millions of dollars in
delinquent taxes enters a new phase this month when the N.C.
Department of Revenue adds a page to its web site listing the names of
dozens of deadbeats. “We’re going to list 100 a month until we go
through the list” of individuals and businesses who have refused to
pay their back taxes, according to Department of Revenue Secretary
Norris Tolson. The department’s “Cyber Shame” initiative may be
around for a while because Revenue is carrying about 250,000
delinquent accounts.
Click
here to go to the Revenue Department web site and see the list.
Bad as that may sound, it’s considerably better than a year ago when
Tolson took over the reins at Revenue. At that time there were about
490,000 taxpayers who owed a collective $377 million in back taxes, of
which more than $235 million were debts more than one year old. The
department’s backlog of unpaid taxes shocked Tolson, the former
DuPont business executive who previously served as secretary of two
other state agencies, Commerce and Transportation.
“When I saw the level of accounts receivables we had, it became
apparent to me the first thing a good business person would do would
be to get those down,” he said in a recent interview. The state’s
fiscal crisis, which was then just beginning to fully emerge, added to
the sense of urgency.
Tolson learned that those back taxes hadn’t been collected because
of a lack of effort by Revenue’s staff. “They were already focused
on how to drive the accounts receivables down, they just didn’t have
the horses to do it,” Tolson said. “Our collector ranks were
thinned down,” he added. “The average collector right now for us
has 650 cases he’s working on at any given time. The national
average is 225.”
So he went to the General Assembly with a persuasive argument: If the
legislature would fund 52 additional Revenue field agents, plus give
the department the authority to use private collection firm to settle
some accounts, he felt confident the department could collect $150
million in back taxes over three years. Project Collect, as the
initiative was called, also gave Revenue the power to impose a 20
percent collection fee on top of the back taxes, penalties and
interest the deadbeats owed. The legislation sailed through the
General Assembly.
Early results are promising. “From the first of July until the end
of October we had collected around $16 million (in back taxes), money
directly attributable to Project Collect,” Tolson said, adding that
he’s confident of collecting $50 million by the end of this fiscal
year.
About half of the tax deadbeats owe the state less than $500 each,
Tolson said. Many of those accounts are being turned over to the
private collection services, he said. That will allow Revenue, with
its increased manpower and muscle, to concentrate on larger cases.
“We do have some significant size cases,” he said. “We probably
have 10 or 15 cases that are $750,000 or more. I’ll give you an
example. We had a large number of delinquent business accounts in one
of the large metropolitan areas and we turned a group of our
collectors lose on those. And in one week they collected $1.4
million.”
The deadbeats whose names turn up on Revenue’s web site this month
shouldn’t be surprised. Tolson said they will be listed there only
after repeated efforts to settle their bills. “They will be notified
in advance by registered mail so they have time to clean up their
bills,” he said.
Over the past few months every delinquent taxpayer has been notified
of the department’s aggressive collection efforts. “We have
notified every one of those accounts. We sent them a bill, saying they
have 30 days to clean up the amount in full and that after 30 days we
will levy a 20 percent collection fee. We had 3,500 folks who called
and set up a payment plan. We collected during that time about $6
million from folks who said, OK I’m going to pay my bill.”
Even as Revenue turns up the heat on tax deadbeats, the department is
trying to improve services to the 90 percent of taxpayers who file and
pay on time, Tolson said. In that regard, Revenue is focusing
significant efforts on getting tax refund checks in the mail as soon
as possible. That’s difficult to do, considering that the department
receives upwards of 1.8 million pieces of mail in a two-week period
around the April 15 tax filing deadline.
“We had a terrible problem here two years ago with processing tax
returns,” Tolson said. “The machinery didn’t work well and we
got into a backlog and once you get into a backlog it’s very hard to
get caught up. As a result of that, we were paying refunds late. We
paid $15 million and change two years ago in interest on refunds. This
year we paid $350,000 (in interest in tax refunds). So we saved the
state $15 million and the taxpayer is happy.”
He’s proud that, on average, the department got tax refund
checks in the mail within nine days of receiving the return. It might
be even shorter this year, given the continuing rise in the number of
electronic tax filers. “We had another 20 percent increase in
electronic filers this year and we think it will go up another 20
percent next year. We went over a million electronic filers this
year.”
And none of them will get their names listed in Cyber Shame.
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