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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

Department of RevenueTax and Water Revenue Bureaus

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



• 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



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



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


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


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


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


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


• 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


Results

Most successful municipal program

-$72 million in overall collections-$49 million General Fund-$22 million for School District-$900k for Hotel Fund


Results

Administrative Costs

Tax Administrator $3.1 millionPR Administrator $1.4 millionOther Expenses $250K


Results

Total Revenue Waived

Interest $10,155,930 Penalties $27,404,428

Other Charges $ 1,783,950

Total $39,344,308


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%.


Lessons Learned

• Accounting for entire inventory• Stats in legal system• Clear back end data transfers• Clear account reconciliations• Imaging• Recording of phone conversations


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


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


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/


Questions and/or Comments

[email protected]/revenue

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