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Strategies to Improve Delinquent Collections Case Study on
Philadelphia Tax Amnesty ProgramTuesday, October 25, 2011
Keith J. Richardson Commissioner, Department of Revenue
City of Philadelphia
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Philadelphia Tax Amnesty Program
• Bill Number 090686 was introduced on Thursday October 1, 2009
• Prior to bill the city controller and the freshman council members were big on having a Tax Amnesty Program
• Preparation for Tax Amnesty began in May 2009
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Philadelphia Tax Amnesty Program
• The bill was passed on December 17, 2009 to provide a temporary Tax Amnesty Program and signed into law by Mayor Nutter on January 10, 2010
• This allowed for a Tax Amnesty Program on 14 taxes in the City
• Sales tax and Hotel tax were administered during the state’s amnesty program
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Philadelphia Tax Amnesty Program
The offer during Amnesty was:100% of penalties, attorney fees and fines waived 50% of interest waived
Eligible Taxes:
Amusement Tax Business PrivilegeHotel Room Rental Tax Liquor Sales TaxNet Profit Tax Outdoor Advertising Tax
Parking Tax School Income TaxReal Estate Tax Vehicle Rental TaxReal Estate Transfer Tax Wage & Earnings Tax Use and Occupancy Tax
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Philadelphia Tax Amnesty Program
Tax Amnesty Program was for taxes originally owed and payable between February 1986 and June 30, 2009
Eligibility for the program All taxpayers “except”
- taxpayers subject to criminal investigation - prior tax amnesty participants/corporate officers
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Tax Amnesty Task Force
Appointed my Deputy as Tax Amnesty Director, who was responsible for:
• Creation of the program• Working with our Amnesty Administrator• Public Relations Administrator• Internal Working Groups• Reporting to Stakeholders
GOAL : $25 million in gross revenue
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Budget for program was $12million- $10 million for Tax Amnesty Adm.- $2 million for Advertising Adm.
RFP for finding a top notch Tax Amnesty Adm.- Firms interviewed: DCS, Linebarger, GRC (SallieMae), MuniServices, GRB
RFP for Public Relations firm to do our advertising- All local firms
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Amnesty working group selected:
GRC - Tax Administrator - familiar with doing an Amnesty Program - very solid track record - well prepared entity
The Star Group - PR Administrator - women owned business in the city - well prepared, understood our needs - willing to work with GRC
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How Will Tax Amnesty Work?
Individuals and Businesses that want to take advantage of Tax Amnesty will need to:
• Complete an application• Register with the City (if needed)• File tax returns (if needed)• Disclose tax liabilities• Pay eligible base taxes and 50% of
interest by June, 25, 2010*• Stay compliant for next 3 years
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• Program ran parallel to the State DOR Program
• GRC opened a tax amnesty office in the city for walk-in traffic
• Star Group advertised nationally and across the tri-state area
• Mayor Nutter was very verbal during the amnesty campaign and council showed approval
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Results
Most successful municipal program
-$72 million in overall collections-$49 million General Fund-$22 million for School District-$900k for Hotel Fund
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Results
Administrative Costs
Tax Administrator $3.1 millionPR Administrator $1.4 millionOther Expenses $250K
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Results
Total Revenue Waived
Interest $10,155,930 Penalties $27,404,428
Other Charges $ 1,783,950
Total $39,344,308
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Results
Of the 21,007 taxpayers who participated in the Tax Amnesty Program 1,698 taxpayers or 8% were new filers not previously identified by the Department of Revenue.
These new filers contributed $5.5 million or 7.5%.
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Lessons Learned
• Accounting for entire inventory• Stats in legal system• Clear back end data transfers• Clear account reconciliations• Imaging• Recording of phone conversations
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Conclusion
Philadelphia’s 2010 Tax Amnesty Program collected $72.8 million in gross revenue, including $48.9 million for the City’s General Fund, $22.9 million for the School District of Philadelphia, and almost $1 million for the Hotel Fund
After accounting for the $4.7 million in administrative costs, the Tax Amnesty Program generated $68.1 million in net
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Post Amnesty Enforcement Efforts (PAEE Up)
• Criminal Prosecution• Increased Sheriff Sales• Revocation of Business Licenses• Increased outside collection efforts• Increased audits and investigations• Vendor Compliance Programs• Employee Indebtedness Program
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PAEE-Post Amnesty Enforcement Efforts
• Pensioners Indebtedness Program• Usage of tax data from the IRS and State DOR• Focus on the Top Tax Deadbeats • http://www.phila.gov/revenue/delinquencies/
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Questions and/or Comments
[email protected]/revenue
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