Philadelphia is oh-so-slow to recoup taxes

Posted: October 07, 2010

IT'S NO SECRET that lots of people owe the city lots of money for property taxes.

Less known: Most municipalities don't struggle like Philly does to collect property taxes, says David Brunori, a professor at George Washington University specializing in state and local tax policy.

What's Philly doing wrong? As the chart on the next page shows, there are two major mistakes: The first is the never-ending piles of delinquent letters. When someone ignores attempts to collect the back taxes, the law department is supposed to put the property up for sale. Often, this doesn't happen. The owner just keeps receiving letters, facing no real consequences, sometimes for more than a decade (and even after he dies).

Over the last year, with tens of thousands of delinquent owners on the books and new ones added all the time, the city and its contractors have submitted fewer than 150 delinquent properties for sheriff's sale most months - despite the fact that the sheriff's office says it could easily process more, and the city can generally recoup the costs of selling a property from the sale itself.

But the law department says that a sheriff's sale isn't a good solution for many properties, and not just because kicking someone out of his home should be a last resort.

Which brings us to the second dead-end: About 25 percent of the properties put up for sale aren't actually sold because they're not worth much to anyone. Others are sold, but end up back on the delinquent list.

The city says it's working to improve things. With a tax amnesty over, the law department is ready to crack down, including an increase in sheriff's sales to 500 a month. And a city working group is considering alternative approaches to dealing with abandoned properties, such as a land bank.

In addition to the city's own efforts, it has hired Linebarger Goggan Blair and Sampson to collect on accounts.

SINCE 2004, Linebarger has brought in 44 percent of the $350 million owed on 75,000 accounts, about $154 million, according to Linebarger's Sharon Humble. (About $101 million was collected without sheriff's sales, which the city didn't allow Linebarger to initiate until 2007.) *

- Kirstin Lindermayer

Kirstin Lindermayer reports for "It's Our Money," a joint project of the Daily News and WHYY, funded by the William Penn Foundation.

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