Ronnie Polaneczky: Didn't know he was a business owner, but city's suing him for 10G in taxes

Posted: October 19, 2010

LAST MONTH, Mayor Nutter warned tax-evading business owners that the city was gearing up for a major smackdown.

"Tax evaders have been getting a free ride for too long!" Nutter said outside the office of a Bustleton Avenue podiatrist who allegedly owes more than $114,000. "The free ride is over!"

He added that sheriff's deputies and city lawyers were poised to descend on the doctor's digs, to auction off its contents to settle the debts.

It was the kind of "gotcha!" moment that a regular guy like Gerald "Bart" Bartholomew would normally cheer as vindication for folks like him, who work hard and pay taxes.

But these aren't normal days for Bartholomew, a mail carrier. The city recently notified him that he, too, is a deadbeat businessman. He's being sued for $10,000 by the city for not filing business-privilege-tax returns for the past 10 years.

His business?

"I delivered newspapers for a while, after my second son was born," says Bartholomew, 45, who lives in Roxborough with wife, Chris, and teenage sons, Jerry and David. "Then I coached basketball at a private school."

His piddling second income - earned between 2000 and 2007 - ranged from $561 to $2,600 per year, and he reported it on his state and federal tax returns.

He didn't think to report it to the city, he says; he said he didn't know he had to. The city apparently learned of the income while cross-referencing tax returns with the state and feds.

"It never occurred to me that I was a business owner," says a bemused Bartholomew, whose wife works part time as a crossing guard. "I don't have employees. I don't take deductions. I thought I was just making extra money to support my family."

His lawyer nephew, Thomas Barnes, who's handling Bartholomew's case, is flabbergasted that his uncle is regarded as a businessman.

"Maybe the city should go after all the paperboys who deliver papers in their neighborhoods and the coaches who try to make their communities better by giving a little something back," Barnes says sarcastically. "I would hate to see these guys scam the city out of any money that's owed."

By now we've all heard how the city's onerous business-privilege tax scares away artists, entrepreneurs and others in the creative economy (bloggers, anyone?) who can't afford to grow their businesses here from exciting dream to thriving reality.

Less discussed is the impact of the business-privilege tax on those, like Bartholomew, who aren't interested in becoming "business owners," but rely on the extra income they can make doing quirky jobs on their own.

For example, "earning a thousand extra a year can make a difference in whether you can pay your car insurance," says City Councilwoman Maria Quinones-Sanchez. "If you're a mom selling a few floral arrangements out of your house, how are you a business owner? That's crazy."

She and Councilman Bill Green will hold hearings next month on legislation they've introduced to reform the tax. One major component would prevent the tax from kicking in until a company's gross receipts pass $100,000. Currently, she says, 50,000 of the city's 85,000 business-tax filers fall in that under-$100,000 category.

"When you consider the time and money we spend going after these small cases, doing the cross-referencing to find them and recover the money, it's ultimately not worth it," Quinones-Sanchez says. "This would give folks the opportunity to work without owing the city money, including the extra fees and fines."

Revenue Commissioner Keith Richardson, who says his department is reviewing the proposed legislation, didn't know the particulars of Bartholomew's case, but emphasizes that citizens are accountable to pay taxes on the income they earn.

They can't just pocket the dollars, especially if, in Bartholomew's case, he knew enough to report the income to the state and feds - which made him look, at least on paper, like a business owner. All income in the city, no matter how small, is subject to either an earned-income or business tax.

Bartholomew and Barnes have already been to court three times, to try to straighten out the mess. Each time, says Barnes, they learn that additional documentation is needed.

The next hearing is Dec. 9.

"I have to laugh about it," says Bartholomew, who has asked the private school where he coaches if they'd add him to their payroll and deduct taxes from his skinny check, so he can avoid the paperwork of being a boss. "If you don't laugh, you cry, right?"

All he wants, he says, is to make a little cash so he can take his family on an annual vacation without going into hock.

"I hate owing money," he says. "Other people might not mind carrying debt. I do. And I really hate that this thing with the city is hanging over my head."

E-mail or call 215-854-2217. For recent columns: Read Ronnie's blog at http://go.philly. com/ronnieblog.