Tax Amnesty

THE TAX AMNESTY first proposed by Councilwoman Joan Krajewski and City Controller Alan Butkovitz is wending its way through Council. I publicly criticized this idea when Krajewski initially proposed it on Aug. 31 and their idea hasn't gotten any better with age. In fact, it has now added more than $12 million in costs for taxpayers. Their plan is that if people with unpaid taxes come in and pay all of the principal, they will get fees and half of the interest waived. In other words, if you had the means to pay your taxes and you just simply chose not to, City Hall would cut you a break.

IFELT SHOCK and awe reading Councilwoman Joan Krajewski's recent op-ed, "Let's Make a Deal on Tax Amnesty. " Shock that she's just realizing that people in Philadelphia are struggling to make ends meet - and, yes, some proud Philadelphians are behind in their city taxes and need help. And awe that she feels amnesty is the answer. Doesn't she understand that if the city continues to not control its costs when our tax base is shrinking, we will be in this same budget situation in the future?

Granting tax delinquents a three-month amnesty period would net the state treasury $50 million, New Jersey's leading tax official said yesterday. But that may not be enough to outweigh moral and practical considerations, testified John Baldwin, director of the state's Division of Taxation. "There is no doubt that the flashy results of tax amnesty in some of our sister states are indeed impressive," Baldwin told an Assembly subcommittee. "It would be nice to have a large pot of money fall out of the sky. . . . I'm not sure the price of it is worth it in the long run. " Assemblyman Karl Weidel (R., Hunterdon)

I have this friend I'll call "Gerard. " He's made a lot of money running with the Wall Street crowd over the years, and he's never reluctant to talk about his successes. He's also fond of bragging about how he's gotten out of paying his taxes, which struck me as kind of dumb until I realized that, for people like Gerard, all aspects of financial life are played according to a different set of rules. My enlightenment came after I heard the city of Philadelphia was offering a tax amnesty.

Gov. Casey is not in a forgiving mood. With state finances in the dumps and the governor anticipating a tax increase around $1.85 billion, the administration is not only opposing the notion of tax amnesty, it doesn't even want anyone talking about it. The notion was introduced as legislation last week by Sen. D. Michael Fisher (R., Allegheny) as a way to bolster the budget. House Republicans this week also called for excusing tax delinquents from paying interest and penalties if they pay up, estimating that could raise $160 million for depleted state coffers.

With less than a week left in Philadelphia's tax amnesty program, more than 12,000 tax delinquents have done the responsible thing and settled their debts not just to the city, but to the people who live, work, and visit here. We thank them, as well as the residents and business owners who pay their taxes on time year after year. The city is doing everything it can to give tax delinquents a chance to clear up old debts. Since the start of the program, we have contacted every known delinquent and more than 30,000 additional Philadelphians whose federal tax filings indicate that they may owe the city money.

RE THE DEC. 17 letter "Tax Amnesty a Costly Proposition": These are extraordinary times as we face at least a $31 million deficit for next year. We must do everything possible to avert any police or firefighter layoffs, or the disruption of other essential city services. Tax amnesty programs have been highly successful tools used by numerous municipal and state governments throughout the U.S. to generate quick and substantial revenues - while cleaning up tax-delinquent databases.

The deadbeats were beating the deadline. Shortly after 7:30 a.m. Friday, more than 100 people were lined up on Juniper Street, waiting for the city's tax amnesty office on Walnut Street to open. Applicants who pay up by midnight will pay no penalty and only half of the accrued interest. The program, which began May 3, collected about $9 million just in its first month. Judging by the late rush, the final tally is likely to be much higher. "I'm an honest guy, just a procrastinator," said Ezra Smith of Wilmington, who estimated he owes "over $12,000, from a lot of years," from real estate taxes involving relatives who "passed on. " Snags, such as getting his business privilege license, have complicated the process, he said.

HARRISBURG - With one day left in Pennsylvania's tax-amnesty program, the state is on target to meet its goal of bringing in $190 million to its cash-strapped coffers, Gov. Rendell told reporters today. Rendell said at a news conference that the state had raked in $180 million as of midday Thursday, and was "confident" that it would reach the $190 million goal by end of the day Friday. The state's tax-amnesty program began in late April, and it allows people and corporations owing back taxes to pay them without any penalties and only half the interest due. In all, the state is owed more than $2.1 billion, according to the administration.

Supporters of tax-amnesty programs fail to recognize an inherent flaw: They reward scofflaws and hinder future tax-collection efforts. Moreover, they cannot be counted on to produce the promised revenue. Pennsylvania's Republican legislators recently unveiled two fiscally irresponsible budget proposals that do not take the difficult but necessary steps needed to bring the budget into balance for the long term. One relies on a tax-amnesty gimmick that is unlikely to work and would send the wrong message to hard-working taxpayers.

After a highly successful tax amnesty program in 2010 and reorganization efforts in the Sheriff's Office, Philadelphia has been ramping up its property-tax collection efforts, doubling the number of delinquent properties taken to sheriff's sale and collecting far more tax revenue without resorting to the expensive tax-sale process. The City Revenue Department and its two cocounsel collection firms have been strategic and tough. We call and send targeted mail to tax delinquents, telling them that they must pay in full or sign payment agreements.

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.

Philadelphia's eight-week tax-amnesty program solidly beat its goals, raising more than $40 million for the city budget and $20 million for the school district. That's $10 million more than the city expected to collect at the outset of the program in early May. But Mayor Nutter warned yesterday that the city's finances are still suffering through the deep national recession. He cautioned against treating the money as a windfall. "I think it's pretty clear that none of us are over the economic hump," Nutter said at a news conference.

Philadelphia has an additional $40 million in its coffers, thanks to its tax-amnesty program. But that money will go only a small way toward fixing the city's budget woes, Mayor Nutter said Tuesday. The extra revenues also herald what the mayor says will be a new era of aggressive tax collection, including criminal prosecutions, as Philadelphia goes after about $943 million in unpaid taxes, interest, and penalties. That figure does not take into account the $40 million collected.

Philadelphia has an additional $40 million in its coffers, thanks to its tax-amnesty program. But that money will go only a small way toward fixing the city's budget woes, Mayor Nutter said Tuesday. The extra revenues also herald what the mayor says will be a new era of aggressive tax collection, including criminal prosecutions, as Philadelphia goes after about $943 million in unpaid taxes, interest, and penalties. That figure does not take into account the $40 million collected.

The city's tax-amnesty program took in $29.6 million, City Controller Alan Butkovitz said, or about what was expected. The city's goal was $30 million to $35 million. After paying for collection and marketing, the city and the School District should net about $27 million, Butkovitz said. Mayor Nutter will hold a news conference Tuesday morning. Douglas Oliver, spokesman for the mayor, said he would not comment on collection amounts until then. As of June 24, the city had received more than $24 million from 21,999 applicants.

They came because the price was right. Hundreds of people lined up just south of City Hall Friday to pay their overdue taxes, many of them with an enthusiasm more often seen among bargain-hunters swarming a holiday sale or on a TV game show. The line ran out of an office building on Juniper Street and hooked around the corner onto Walnut Street as the city's tax-amnesty program, which promised to eliminate all penalties and half of accumulated interest on unpaid taxes, ended late in the day. "It's good.

The deadbeats were beating the deadline. Shortly after 7:30 a.m. Friday, more than 100 people were lined up on Juniper Street, waiting for the city's tax amnesty office on Walnut Street to open. Applicants who pay up by midnight will pay no penalty and only half of the accrued interest. The program, which began May 3, collected about $9 million just in its first month. Judging by the late rush, the final tally is likely to be much higher. "I'm an honest guy, just a procrastinator," said Ezra Smith of Wilmington, who estimated he owes "over $12,000, from a lot of years," from real estate taxes involving relatives who "passed on. " Snags, such as getting his business privilege license, have complicated the process, he said.

I have this friend I'll call "Gerard. " He's made a lot of money running with the Wall Street crowd over the years, and he's never reluctant to talk about his successes. He's also fond of bragging about how he's gotten out of paying his taxes, which struck me as kind of dumb until I realized that, for people like Gerard, all aspects of financial life are played according to a different set of rules. My enlightenment came after I heard the city of Philadelphia was offering a tax amnesty.

It's not too late to take advantage of the city's tax-amnesty program - a chance to pay off unpaid taxes with just half the interest and none of the penalties that the city has tacked on over the years. Information is available by telephone at 877-645-4108, or online at www.PhillyTax Amnesty.com. Up until midnight tomorrow, taxpayers can apply and make payments either by telephone or online. The city is also staffing a walk-in site in Center City at 1315 Walnut St., Suite 1300, where people can file applications, make payments and get assistance with filing back tax returns, the Revenue Department said.