Phila. getting better, slowly, at going after deadbeats

Posted: March 26, 2014

PHILADELPHIA Philadelphia must do more to collect the millions owed to it by tax deadbeats.

That was the message from several tax and revenue experts at a marathon City Council hearing Monday. While the city took baby steps last year to reduce its half-billion-dollar tax delinquency hole by $18 million, it's not good enough, they said.

Nearly a year after Mayor Nutter appointed the city's first Chief Revenue Collections Officer and vowed to install a system to better collect monies owed, Council's Appropriations Committee heard testimony from current and former city officials on the process for going after tax deadbeats as well as ideas from those outside government.

Some of the taxes and fees are decades-old debts.

"We want our money," city Revenue Commissioner Clarena Tolson testified Monday.

In the last year, the city has used two new tactics - revoking deadbeats' commercial licenses and taking over rental properties and using the rents to pay off tax debt. Plus, it sent more properties to sheriff's sales to reduce the amount owed the city. Tax delinquency shrank from $533 million in December 2012 to $514 million at the end of 2013, Tolson said.

One aspect of the city's push that has lagged behind is the plan to launch a tax delinquency "data warehouse and case management system." A request for proposals was issued in May; a vendor has not been chosen.

Tolson said that has not deterred her team from pursuing new ways of getting the dollars owed to the city.

Since October, the city has taken owners of 900 rental properties to court for its "sequestration" program, in which a judge appoints a receiver to manage the property and use the rents to pay off the tax debt. So far, the city has collected $2.8 million from 148 properties that have gone to receivership.

Officials are also working with outside counties to launch a new program, made possible last year by state legislation, to place liens on any property in the state owned by persons who are delinquent in paying their property taxes in Philadelphia.

More deadbeats will likely pay up "once we have the ability to hit them where they live," Councilman W. Wilson Goode Jr. said.

The caveat to that program: liens can only be put on properties that are owned under the same name. In the case of shell corporations, the city could use "other tools," Tolson said.

Another large chunk of money owed to the city is $90 million in Business Income & Receipts Taxes, some of which have gone unpaid for up to six years. Delinquences aside, BIRT revenues usually fuel the city with $400 million each year.

Real estate taxes only make up about 14 percent of total city revenues. The rest is mostly business and wage taxes.

"We can't just focus on property taxes," Goode said. "Revenue collection has to be broad because our tax structure dictates that."


cvargas@phillynews.com

215-854-5520

@InqCVargas

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