Tax Administration: Few State and Local Governments Publicly Disclose
Delinquent Taxpayers (Letter Report, 08/24/1999, GAO/GGD-99-165).

Congress is studying whether greater taxpayer compliance might be
achieved by publicly reporting individuals who have failed to file their
federal tax returns. This report provides information on state and local
public disclosure programs. GAO determines (1) which state and local
governments are running programs to publicly disclose the names of
taxpayers who are delinquent in paying the income taxes that they owe or
do not file income tax returns, (2) the differences among these
programs, and (3) state and local revenue officials' views on whether
their disclosure programs are improving compliance.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-99-165
     TITLE:  Tax Administration: Few State and Local Governments
	     Publicly Disclose Delinquent Taxpayers
      DATE:  08/24/1999
   SUBJECT:  Tax evasion
	     Taxpayers
	     Income taxes
	     Delinquent taxes
	     Tax nonpayment
	     State governments
	     Local governments
	     Tax information confidentiality
	     State programs
IDENTIFIER:  Connecticut
	     Illinois
	     Montana
	     New Jersey
	     District of Columbia

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    United States General Accounting Office GAO               Report
    to the Joint Committee on Taxation August 1999       TAX
    ADMINISTRATION Few State and Local Governments Publicly Disclose
    Delinquent Taxpayers GAO/GGD-99-165 United States General
    Accounting Office
    General Government Division Washington, D.C.  20548 B-282522
    August 24, 1999 The Honorable Bill Archer Chairman The Honorable
    William V. Roth, Jr. Vice Chairman Joint Committee on Taxation The
    Internal Revenue Service Restructuring and Reform Act of 1998
    required the Joint Committee on Taxation to study whether greater
    levels of compliance might be achieved by publicly disclosing
    taxpayers who have not filed their required federal tax returns.
    This report provides the information about state and local public
    disclosure programs that you requested to assist you in your
    study. Specifically, our objectives were to determine (1) which
    state and local governments are operating programs to publicly
    disclose the names of taxpayers that are delinquent in paying the
    income taxes they owe or do not file income tax returns, (2) the
    differences, if any, among these programs, and (3) state and local
    revenue office officials' views on whether their disclosure
    programs are improving compliance. Because of your interest in the
    individual programs, we are also providing a description of those
    programs that we identified in appendix I. Consistent with your
    request, in this report we define public disclosure as a process
    for proactively publicizing the names and other identifying
    information about taxpayers that are delinquent or do not file
    returns.1 Such programs represent a departure from historical
    practice. As described later in this report, federal and state
    confidentiality statutes generally prohibit the disclosure of
    taxpayer information. Of the state and local governments we
    surveyed, only four states- Results in Brief
    Connecticut, Illinois, Montana, and New Jersey-and the District of
    Columbia are operating programs to publicly disclose the names and
    other information about individuals or businesses that are
    delinquent in paying income taxes. None of the programs include
    specific provisions for disclosing the names of taxpayers that
    simply fail to file their required tax returns. Instead,
    compliance employees are to assess taxes owed by nonfilers they
    have identified and then process nonfiler accounts in the 1As
    such, these proactive programs can be distinguished from other
    disclosures, such as a public notice pursuant to a legal action
    (e.g., when a lien is placed on a taxpayer's property). Page 1
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers B-282522
    same manner as other taxpayers' accounts. In the event that such
    nonfilers are found to be delinquent, they also become subject to
    public disclosure. The five public disclosure programs differ in
    regard to their legal authority and operations. Like the federal
    government, the four states and the District of Columbia have tax
    provisions that protect the confidentiality of taxpayer
    information. Two states-Connecticut and Illinois-and the District
    have enacted legislation providing explicit statutory authority
    for their programs, notwithstanding confidentiality safeguards.
    The two other states-Montana and New Jersey-have not. Officials
    from these two states said that they do not need additional
    statutory authority to implement public disclosure because a tax
    delinquency is a matter of public record after certain legal
    action has been taken, such as filing a certification of debt in
    superior court, which is entered into a judgment docket. The
    programs also operate differently, varying as to the procedures
    leading up to disclosure, the media through which disclosure is
    made, the type of information disclosed, and how often that
    information is updated. Revenue office officials from the four
    states and the District of Columbia believe that their programs
    have improved or will improve compliance. However, officials are
    unable to isolate the gain in revenue collections directly
    attributable to their programs. As they explained, public
    disclosure is one of many tools that revenue offices use to gain
    compliance. Some revenue office officials also noted that factors
    outside the control of their offices-notably, the economy-affect
    compliance. Like the Internal Revenue Service, state and local
    revenue offices have Background    authority to collect taxes from
    taxpayers that they believe have not paid the taxes they owe,
    including taxpayers that are delinquent or have not filed their
    returns. The collection process followed by most revenue offices
    is phased and generally begins with an assessment of taxes owed.
    Thereafter, the office has a number of collection tools it can use
    to obtain compliance, including mailing notices to inform the
    taxpayer of the taxes that have been assessed and the procedures
    available for resolving the delinquency. In the case of taxpayers
    that do not respond, the revenue office also has other tools at
    its disposal. These include telephone calls and in-person visits,
    the placement of a lien on the taxpayer's property, levying the
    taxpayer's bank accounts, and ultimately the seizure and sale of
    the taxpayer's property. To resolve delinquencies not resolved
    using traditional collection tools, revenue offices have
    experimented with other Page 2                     GAO/GGD-99-165
    Public Disclosure of Delinquent Taxpayers B-282522 less
    traditional tools, including public disclosure programs as defined
    in this report. To accomplish our three objectives, we used a
    combination of surveys and Scope and      interviews with state
    and local revenue office officials. Initially, to Methodology
    determine which state and local governments are operating public
    disclosure programs, we developed a short survey and sent it to
    all 50 states. We asked officials from revenue offices in each
    state whether they had such a program or knew of any local
    governments operating a disclosure program in their state. Because
    these officials identified no local governments with public
    disclosure programs, we used the 1998 State Tax Guide to identify
    cities and counties that had a local personal or corporate income
    tax, and thus potentially might be operating a program. As agreed
    with the Committee, we used this information to select no more
    than five cities and five counties per state, using population
    size-starting with the largest-as our criterion. The group
    included 24 cities and 8 counties in 12 states and the District of
    Columbia.2 Appendix II provides a list of the cities and counties
    we surveyed. We then sent surveys, which were virtually identical
    to the ones sent to states, to these governments. The response
    rate for surveys of states, cities, and counties was 100 percent.
    To determine the differences among the programs and the views of
    state and local officials on whether the programs are improving
    compliance, we conducted structured interviews by phone or in-
    person with officials from revenue offices in the jurisdictions
    that reported having public disclosure programs. To provide the
    most complete information possible, we also interviewed officials
    from jurisdictions reporting that they had discontinued or were
    planning to adopt a program. We did not verify the survey
    responses provided by the state and local revenue offices. The
    results of our survey of cities and counties may not be
    representative because we used a judgmental sample, focusing on
    the largest cities and counties. Also, as requested by the
    committee, we are not making any recommendations in this report.
    2We eliminated cities and counties, such as Baltimore, Maryland,
    that had a piggyback tax, i.e., income tax collected by the state
    and distributed to local governments. We also eliminated cities
    and counties that have authority to levy an income tax but did
    not, including cities and counties in Arkansas, Georgia, and
    Virginia. Page 3
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers B-282522
    We requested and received comments on the descriptions of each
    state and the District of Columbia's disclosure program from
    cognizant revenue office officials, and we incorporated their
    comments where appropriate. We did our review from March 1999 to
    July 1999 in accordance with generally accepted government
    auditing standards. As of June 1999, only four states-Connecticut,
    Illinois, Montana, and New Public Disclosure
    Jersey-and the District of Columbia had programs operating to
    publicly Programs Are in Four             disclose the names and
    other information about individuals or businesses that were
    delinquent in paying income taxes. All of the programs are States
    and the District relatively new. Connecticut's program, the first
    to be implemented, began of Columbia
    disclosing on the Internet in January 1997. The District of
    Columbia, Montana, New Jersey, and Illinois programs began
    disclosing on the Internet in October 1997,April 1998, May 1999,
    and September 1999, respectively.3 None of the other state and
    local governments we surveyed had a public disclosure program.
    None of the programs publicly disclose the names of taxpayers that
    fail to file their required tax returns. Instead, revenue office
    employees assess nonfilers the taxes they owe and process their
    accounts in the same manner as delinquent taxpayers should the
    nonfilers be determined to owe taxes. Generally, revenue office
    employees in the four states and the District of Columbia compare
    federal and state income tax returns to identify individuals that
    did not file their state income tax return. Identified individuals
    are then to be assessed an estimated amount and notified through
    traditional billing and collections procedures. Should the
    individual then fail to pay or resolve the assessment, the account
    is to be processed in the same manner as a delinquent taxpayer's
    account, which ultimately may include public disclosure. In
    response to our survey, officials from Wisconsin and Minnesota
    reported that public disclosure programs were either being
    developed or considered. All of the states and the District of
    Columbia that have or are planning programs told us that they used
    Connecticut's program as a 3The dates shown are when the
    governments began or planned to begin using the Internet or press
    releases to proactively disclose the names of delinquent
    taxpayers. Connecticut had begun preparing a list of delinquent
    taxpayers beginning in September 1996, which was open for public
    inspection at the revenue office. Page 4
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers B-282522
    model. Also, Connecticut's tax commissioner told us that 24 other
    states and five cities had requested information about the state's
    program.4 Officials from North Dakota reported that in September
    1995, the state's Department of Revenue published a list of
    approximately 4,000 taxpayers with unsatisfied liens dating back
    to 1982. However, they said that this effort was discontinued in
    January 1997 because of publicity about its many errors, such as
    including taxpayers that had resolved their liens. Also, North
    Dakota's newly elected commissioner told us he believed that the
    disclosure unnecessarily embarrassed taxpayers. Three of the
    programs we identified are operating under explicit statutory
    Programs' Legal      authority, and two are not. Connecticut,
    Illinois and the District of Authority and        Columbia have
    statutes that explicitly authorize public disclosure of delinquent
    taxpayers. Connecticut's statute requires tax officials to
    Operations Differ    maintain, and make available for public
    inspection, a list of delinquent taxpayers. Illinois' statute
    explicitly states that tax officials may disclose taxpayers that
    are delinquent in the payment of tax liabilities. Similarly, the
    District of Columbia's statute grants authority for tax officials
    to publicly disclose delinquent taxpayers. New Jersey and Montana
    do not operate their programs under specific statutory authority.
    Like the other three jurisdictions, New Jersey and Montana have
    statutes designed to safeguard the confidentiality of taxpayer
    information. For example, New Jersey's confidentiality statute
    explicitly provides that taxpayer records and files shall be
    confidential and may not be disclosed. However, according to state
    officials, another provision allows tax officials to file a
    certificate of debt in superior court against a taxpayer, which is
    entered into the judgment docket, thereby making the delinquency a
    matter of public record. Since the certificate of debt is a public
    record, revenue office officials said that they have the necessary
    authority to publicly disclose the information included therein
    with regard to delinquent taxpayers. Montana's confidentiality
    statutes also prohibit the disclosure of taxpayer information.
    Montana officials told us that another provision provides that
    after a warrant is filed with the clerk of the district court and
    included in 4These states were Arizona, California, Colorado,
    Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Nebraska,
    Nevada, New Mexico, North Carolina, Oklahoma, Oregon,
    Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah,
    Virginia, Washington, West Virginia, and Wyoming. The cities were
    Birmingham, AL; Boston, MA; Juneau, AK; Milwaukee, WI; and New
    York, NY. Page 5
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers B-282522
    the judgment docket, the information becomes a matter of public
    record and subject to public disclosure on the Internet,
    newspapers, or any other medium the state may choose. The programs
    also operate differently. As shown in table 1, they differ with
    respect to the procedures leading up to disclosure, the media
    through which the disclosure is made, the type of information
    disclosed, and the frequency with which information is updated. As
    table I also shows, four of the programs include provisions to
    send letters to delinquent taxpayers, warning them of impending
    disclosure if they do not resolve their delinquency.5
    Additionally, the length of time to respond to the warning varies
    from 10 business days to 60 calendar days; all 5 governments use
    the Internet, while 3 also use press releases to disclose
    delinquent taxpayers; the number of taxpayers listed varies from
    50 to all that qualify, and the frequency of updates varies from
    monthly to periodically, as new information becomes available.
    Table 1: Differences in Program Operations
    Programs District of Program procedure
    Connecticut                    Columbia
    Illinois                     Montana                       New
    Jersey Warning letter of impending disclosure sent            Yes
    Yes                           Yes                          No
    Yes Days for taxpayers to respond to warning               10
    (business)                  30 (calendar)                 60
    (calendar)                Not applicable 14 (business) Medium of
    disclosure                                   Internet, press
    Internet                      Internet and
    Internet and                  Internet release and
    press release                press release newspaper Number of
    taxpayers disclosed on delinquency list 100
    All that qualify All that qualify 50
    200 Disclosure of mailing address                          Yes
    No                            Yes                          No
    No Disclosure of court docket number                      No
    No                            No                           No
    Yes Disclosure of type of tax                              Yes
    No                            Yes                          Yes
    No Disclosure of year(s) of tax liability                 No
    No                            Yes                          No
    Yes Frequency of update of delinquency list                Monthly
    Periodically                  Periodically                 Monthly
    Monthly Source: GAO surveys and structured interviews of state and
    local revenue office officials. 5The programs provide that
    taxpayers can resolve their delinquencies by paying in full or
    negotiating payment agreements. Taxpayers may also provide
    evidence that the liability is an error or demonstrate that
    bankruptcy procedures are in process. Page 6
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers B-282522
    Revenue office officials believe that their public disclosure
    programs Revenue Office                   improve compliance. They
    base their views mostly on anecdotal evidence Officials Believe
    Their from statistics on accounts receivable and collections.
    Montana reported that as of June 1999, numerous accounts
    receivable had been resolved Public Disclosure
    since the program's inception in April 1998. Specifically, Montana
    said that Programs Improve                 18 payment plans had
    been set up, 23 accounts had been paid in full, and Compliance
    23 taxpayers had filed their returns. During this time,
    approximately 150 taxpayers had been disclosed on the Internet.
    The District of Columbia reported that as of June 1999, it had
    collected $669,912 from seven taxpayers after they had received
    warning letters that their names would be disclosed on the
    Internet. As of June 1999, approximately 150 warning letters had
    been sent to delinquent taxpayers. Additionally, revenue office
    officials from Connecticut and the District of Columbia added that
    they believe public disclosure had a salutary effect on voluntary
    compliance. However, the state and District revenue office
    officials recognized that such statistics were not good indicators
    of program impact because they do not isolate the effect of public
    disclosure on accounts receivable and collections. As they
    explained, public disclosure is one of many tools that revenue
    offices use to gain compliance. For example, Montana officials
    noted that at about the same time the first list of delinquent
    taxpayers was published on the Internet, the state implemented an
    automatic phone system (the predictive dialer), which enabled
    collectors to contact a significantly greater number of taxpayers
    than they were previously able to contact. The collectors were
    able to contact more taxpayers because the automated phone system
    makes multiple calls, screening out nonreponses, busy signals, and
    answering machines, and then directs calls that are answered by
    the taxpayer to available collectors. While District of Columbia
    officials were able to identify payments from taxpayers that had
    been warned that their names would be published on the Internet if
    they did not resolve their tax liabilities, they recognized that
    other factors could have influenced the taxpayers' decision to
    pay. None of the revenue offices had undertaken a thorough
    evaluation of their program. Such an evaluation would be expensive
    and, as our prior work has shown, isolating the impact of such
    programs would be difficult.6 Moreover, revenue office officials
    from New Jersey and Connecticut said that factors outside of tax
    administration-notably, the economy-also affect compliance.
    6Budget Process: Issues Concerning the 1990 Reconciliation Act
    (GAO/AIMD-95-3, Oct. 1994). Page 7
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers B-282522
    We are sending copies of this report to Representative Charles B.
    Rangel, Ranking Minority Member, Joint Committee on Taxation, and
    Senator Daniel P. Moynihan, Ranking Minority Member, Senate
    Committee on Finance. We are also sending copies to the Honorable
    Lawrence H. Summers, Secretary of the Treasury; the Honorable
    Charles O. Rossotti, Commissioner of Internal Revenue; and the
    Honorable Jacob Lew, Director, Office of Management and Budget;
    and other interested parties. We will also send copies to those
    who request them. If you or your staff have any questions
    concerning this report, please contact me at (202) 512-9110 or A.
    Carl Harris, Assistant Director, at (404) 679-1900. Other major
    contributors to this report are acknowledged in appendix III.
    Margaret T. Wrightson Associate Director, Tax Policy and
    Administration Issues Page 8                     GAO/GGD-99-165
    Public Disclosure of Delinquent Taxpayers Page 9    GAO/GGD-99-165
    Public Disclosure of Delinquent Taxpayers Contents 1 Letter 12
    Appendix I                Connecticut
    12 Profiles of State and     District of Columbia
    13 Illinois
    15 Local Governments         Montana
    16 With Public Disclosure New Jersey
    18 Programs 20 Appendix II Cities and Counties We Surveyed 21
    Appendix III GAO Contacts and Staff Acknowledgments Table 1:
    Differences in Program Operations
    6 Tables Page 10                  GAO/GGD-99-165 Public Disclosure
    of Delinquent Taxpayers Page 11    GAO/GGD-99-165 Public
    Disclosure of Delinquent Taxpayers Appendix I Profiles of State
    and Local Governments With Public Disclosure Programs In this
    appendix, we describe each of the five public disclosure programs.
    All the information provided in this appendix was reported by
    state and local revenue office officials. Other than clarifying
    this information with the appropriate officials, we did not
    attempt to validate its accuracy. In January 1997, the Connecticut
    Department of Revenue Services began Connecticut
    publicly disclosing on the Internet
    (http://www.state.ct.us/drs/delinq/ mart100.html), newspapers, and
    press releases, the names of Connecticut's top 100 delinquent
    taxpayers, including businesses and individuals. In 1986, section
    12-7a of the Connecticut Tax Code was amended to Legal Authority
    require the tax commissioner to prepare a list of delinquent
    taxpayers and make it available for public inspection. Revenue
    office officials told us that the public disclosure program was
    Impetus                   initiated as a means of applying
    "social" pressure to encourage people to pay the taxes they owe.
    Certified letters, return receipt requested, are sent each month
    to the top Operating Procedures      200 delinquent taxpayers
    (those with the largest accounts that were delinquent for more
    than 90 days), warning them of impending disclosure on the
    Internet if they do not resolve their delinquencies within 10
    business days. Meanwhile, officials screen the list for taxpayers
    whose names should not be published.1 When 10 days have elapsed,
    officials have 5 days to finalize and narrow the list to the top
    100. The information disclosed includes the taxpayer's name,
    address, amount owed (including penalties and interest), and type
    of tax owed. It is updated monthly. Disclosure is discontinued for
    any of the following reasons: *  taxpayer pays, negotiates a
    payment agreement, or otherwise resolves the account; *
    taxpayer's account has appeared on the Web site for 3 or more
    consecutive months, and the revenue office has verified that: *
    certified letters have been undeliverable for 3 consecutive
    months, but not "refused" by the addressee or *  the account is
    not collectible for statutory or regulation-based reasons; or
    1Officials screen taxpayers' names for those who may have
    voluntarily paid or are in the process of resolving their
    delinquency, yet such transactions are not yet in the computer
    system. Page 12
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers Appendix
    I Profiles of State and Local Governments With Public Disclosure
    Programs *  taxpayer's account has appeared on the Web site for 4-
    6 consecutive months, and revenue officials have verified that
    bankruptcy proceedings have occurred. Nonfilers can be included on
    the list after an assessment is made and the account becomes
    delinquent. Their accounts are then processed in the same manner
    as other delinquent accounts and are not identified as nonfilers.
    Revenue office officials reported that they have not had any
    inaccurate Problems/Complaints            disclosures, complaints
    from taxpayers, or opposition from taxpayers or interest groups.
    Revenue office officials told us that since the program's
    inception, the Effect on Compliance           revenue office had
    collected $52 million in overdue tax revenues and entered payment
    agreements totaling $12 million. Revenue office officials said
    that they could not determine the extent to which public
    disclosure affected collections because other collection tools
    could have influenced taxpayers' decisions to pay. Revenue office
    officials also stated that factors outside the control of their
    offices, such as the economy, also affect compliance. Revenue
    office officials reported that they use several tools to gain
    Other Tools for Improving      compliance, such as letters, liens,
    levies, and seizures. Additionally, Compliance
    Connecticut has used other tools, such as a Tax Amnesty Program, a
    Voluntary Disclosure Program, and the Nexus Project.2 In October
    1997, the District of Columbia's Office of Tax and Revenue
    District of Columbia           began publicly disclosing on the
    Internet (http://www.dccfo.com/ TAXPAYER2.htm) the names of
    selected uncooperative delinquent taxpayers, including businesses
    and individuals, who owe more than $10,000.3 In 1947, section 47-
    1805.4 of the District of Columbia Code was enacted, Legal
    Authority                granting the District authority to
    disclose delinquent taxpayers. 2The Tax Amnesty Program allowed
    nonfilers to come forth and pay their taxes without penalty. The
    Voluntary Disclosure Project offers noncompliant taxpayers
    favorable terms to pay their back taxes. The Nexus Project is an
    effort to identify and collect the taxes owed by nonresident
    taxpayers. 3In May 1999, 94 taxpayers were listed. This
    represented all delinquent taxpayers that had been processed to
    disclosure. The list included two taxpayers who owed less than
    $10,000, $9,743.48 and $9,749.69, respectively. Page 13
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers Appendix
    I Profiles of State and Local Governments With Public Disclosure
    Programs Revenue office officials told us that the public
    disclosure program was Impetus                   initiated as
    another tool to encourage taxpayers to pay the taxes they owe.
    They also told us that they were impressed with Connecticut's
    public disclosure program. When an account is delinquent for at
    least 90 days, a certified letter is sent, Operating Procedures
    warning the taxpayer that failure to work with the Office of Tax
    and Revenue within 30 days to resolve the delinquency could result
    in public disclosure. After the disclosure, a copy of the Internet
    screen is mailed to the delinquent taxpayer. The information
    disclosed includes the taxpayer's name (including the responsible
    officer(s) for businesses) and the amount owed. The delinquency
    list is updated periodically as new information becomes available.
    Disclosure is not made (or discontinued if already made) for any
    of the following reasons: *  taxpayer makes payment arrangements,
*  revenue office determines that a mistake was made in
    calculating the tax, *  taxpayer enters bankruptcy proceedings, or
*  taxpayer provides evidence that he is not the responsible
    officer of a business. Nonfilers can be included on the list after
    an assessment is made and their accounts become delinquent. Their
    accounts are then processed in the same manner as other delinquent
    accounts and are not identified as nonfilers. Additionally, the
    Office of Tax and Revenue publishes a separate list on the
    Internet of taxpayers it is unable to locate after exhaustive
    investigation. The public is invited to advise the Office of Tax
    and Revenue of the whereabouts of these taxpayers. Revenue office
    officials told us that they have not conducted an overall Effect
    on Compliance      evaluation of their disclosure program because
    of staff limitations. They told us that in fiscal year 1999,4 the
    revenue office collected $669,912 after sending warning letters
    and $70,587 after disclosure on the Internet. However, revenue
    office officials recognized that other factors could have
    influenced the taxpayers' decisions to pay. 4As of June 1999. Page
    14                                               GAO/GGD-99-165
    Public Disclosure of Delinquent Taxpayers Appendix I Profiles of
    State and Local Governments With Public Disclosure Programs
    Revenue office officials reported that they were aware of only one
    instance Problems/Complaints            where inaccurate
    information was disclosed on their Web site. In this case, an
    individual was inappropriately identified as the responsible
    officer of a business. After providing information proving that he
    was not the responsible officer, the revenue office corrected the
    mistake. Officials said that they had not received any complaints
    about the public disclosure program or any opposition from
    interest groups. The disclosure program is one of many tools the
    District uses to improve Other Tools for Improving      compliance
    and collect unpaid taxes. Other tools include telephone Compliance
    contacts, letters, liens, and seizures. In September 1999, the
    Illinois Department of Revenue plans to disclose on Illinois
    the Internet (http://www.revenue.state.il.us/) and through press
    releases, the names of all delinquent taxpayers, including
    businesses and individuals, who have final liabilities greater
    than $10,000 for longer than a period of 6 months. Section 39b54
    of the Illinois Civil Administration Code, enacted in August Legal
    Authority                1998, with an effective date of January
    1999, provides Illinois' authority for its public disclosure
    program. Revenue office officials told us that the public
    disclosure program was Impetus                        initiated to
    decrease the amount of accounts receivable. The revenue office was
    also influenced by Connecticut's public disclosure program.
    Certified letters are sent to those taxpayers with delinquent
    accounts of at Operating Procedures           least 6 months,
    warning them that their names will be published on the Internet if
    they do not make payment arrangements or resolve their accounts.
    Taxpayers have 60 days to respond. The information to be disclosed
    includes the taxpayer's name; amount owed; mailing address; type
    of tax owed; tax period; and for corporations, the president's
    name. While the legislation stipulates an annual list, the program
    administrator said that names will be removed periodically, as
    accounts are paid, and that new names will be placed on the list
    only once a year. Disclosure may be discontinued for any of the
    following reasons: *  account is paid in full, *  payment
    arrangements are made, *  old payment agreements are brought into
    compliance, or *  legal proceedings (i.e., administrative
    hearings, civil court, or bankruptcy) are under way. Page 15
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers Appendix
    I Profiles of State and Local Governments With Public Disclosure
    Programs Nonfilers can be included on the list after an assessment
    is made and their accounts become delinquent. Their accounts are
    then processed in the same manner as other delinquent accounts and
    are not identified as nonfilers. Revenue office officials told us
    that it is too early to determine the full Effect on Compliance
    impact of the program. However, they reported that after sending
    warning letters to 5,200 delinquent taxpayers since March 1999,
    $2.9 million had been collected, $918,000 in payment agreements
    had been made, and $453,000 in accounts receivable were resolved
    (i.e., the taxpayer demonstrated that amount was not owed).5
    Revenue office officials reported that they have not had any
    opposition Problems/Complaints          from interest groups. They
    have received some letters of complaint from businesses with the
    same or similar names as delinquent taxpayers. Revenue office
    officials reported that they use other tools to gain Other Tools
    for Improving    compliance, such as letters, liens, levies, and
    seizures. Other tools include Compliance                   denying
    the issuance or renewal of licenses and utilizing private
    collection agencies. In April 1998, the Montana Department of
    Revenue began publicly Montana                      disclosing on
    the Internet (http://www.state.mt.us/revenue/del._tax_ accts.html)
    and through press releases, the names of Montana's top 50
    delinquent taxpayer accounts, including businesses and
    individuals. Montana does not have a statute that specifically
    addresses public Legal Authority              disclosure. However,
    according to Montana officials, section 15-1-704 of Montana's Tax
    Code allows the department of revenue to file a warrant with the
    district court to be included in the judgment docket, which makes
    the delinquency a matter of public record. The public disclosure
    program was initiated in an effort to improve Impetus
    compliance. Also, revenue office officials told us that they were
    impressed by Connecticut's public disclosure program. If taxpayers
    do not pay their taxes within 30 days of the due date, the
    Operating Procedures         Department of Revenue notifies the
    delinquent taxpayer, either by telephone or mail, that unless
    payment is received within 30 days of the date of the notice, a
    warrant of distraint may be issued and filed in the district
    court. The filing of warrants with the clerk of the district court
    to 5As of May 21, 1999. Page 16
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers Appendix
    I Profiles of State and Local Governments With Public Disclosure
    Programs be included in its judgment docket is the basis of
    Montana's disclosure program; as such, legal action renders a
    delinquency a matter of public record. The information disclosed
    includes the taxpayer's name, city and state of residence, tax
    type, and amount owed. The information is to be updated monthly.6
    Public disclosure is discontinued for any of the following
    reasons: *  payment plan is established, *  return is filed, *
    revenue office accepts an offer-in-compromise, *  taxpayer files
    for bankruptcy, or *  taxpayer is on the list for 6 months.
    Nonfilers can be included on the list after an assessment is made
    and their accounts become delinquent. Their accounts are then
    processed in the same manner as other delinquent accounts and are
    not identified as nonfilers. Since the program's inception,
    revenue office officials reported that as of Effect on Compliance
    June 1999, *  23 taxpayers paid in full, *  18 negotiated payment
    plans, *  23 filed outstanding returns, and *   2 filed amended
    returns. The revenue office officials told us that they had
    collected $367,839 as a result of these actions. They recognized
    that other factors may have contributed to the taxpayers'
    decisions to pay or resolve their delinquencies. For example,
    Montana officials noted that at about the same time the first list
    of delinquent taxpayers was published on the Internet, the state
    implemented an automatic phone system (the predictive dialer),
    which enabled collectors to contact a significantly greater number
    of taxpayers. Revenue office officials stated that in one
    instance, inaccurate information Problems/Complaints       was
    disclosed on the Internet. In that case, the amount of taxes owed
    was overstated because the tax rate was applied incorrectly. The
    state has received few complaints from taxpayers and no opposition
    from interest 6The March 1999 listing had not been updated as of
    July 15, 1999. According to the program administrator, failure to
    update the Internet listing was an oversight. Page 17
    GAO/GGD-99-165 Public Disclosure of Delinquent Taxpayers Appendix
    I Profiles of State and Local Governments With Public Disclosure
    Programs groups. One local attorney tried to organize citizens in
    opposition to the Internet program, but he was unable to gain much
    support, according to revenue office officials. Revenue office
    officials reported that they use other tools to gain Other Tools
    for Improving    compliance, including telephone contacts,
    letters, warrants of distraint Compliance
    (liens), levies, and offers-in-compromise. In May 1999, the New
    Jersey Division of Taxation began publicly disclosing New Jersey
    on the Internet
    (http://www.state.nj.us/treasury/taxation/jdgdiscl.htm), the names
    of New Jersey's 100 businesses and 100 individuals that owe the
    most. New Jersey does not have a provision that expressly
    authorizes a public Legal Authority              disclosure
    program. According to New Jersey officials, the filing of a
    certificate of debt under section 54:49-12 forms the basis of New
    Jersey's public disclosure program. When the clerk files the
    certificate in the judgment docket, the information contained
    therein becomes public record. Revenue office officials told us
    that the public disclosure program was Impetus
    initiated in an effort to collect outstanding tax liabilities.
    Also, they were influenced by the reported success of
    Connecticut's public disclosure program. The public disclosure
    program is not initiated until after standard Operating Procedures
    collection tools are used, including sending the taxpayers a
    statement of account, bill, notice of assessment, and a letter
    warning that failure to resolve their delinquency in 30 or 90
    days7 will result in the filing of a certificate of debt. After
    the certificate of debt is filed, taxpayers may be subject to
    actions, such as levy, seizure, and/or referral to the Attorney
    General. Finally, delinquent taxpayers are warned, through
    certified mail, that failure to resolve their delinquency within
    14 days may result in the disclosure of their certificate of debt
    information on the Internet. The 100 individuals and 100
    businesses that owe the most are disclosed. The information
    disclosed includes the taxpayer's name; trade name (if a
    business); city; date and amount of the certificate of debt; and
    the court docket number. The information is updated monthly.
    7Businesses are given 30 days, while individuals are given 90.
    Page 18                                               GAO/GGD-99-
    165 Public Disclosure of Delinquent Taxpayers Appendix I Profiles
    of State and Local Governments With Public Disclosure Programs
    Disclosure is discontinued if the taxpayer *  shows proof of
    bankruptcy proceedings, *  enters into a deferred payment
    arrangement or closing agreement, or *  pays all tax liabilities.
    Also, taxpayers that have not paid outstanding liabilities or
    entered into a deferred payment arrangement or closing agreement
    may be removed to make room for the posting of new names. Such
    taxpayers may be re- posted at any time until the delinquencies
    are resolved. Nonfilers can be included on the list after an
    estimated assessment is made and a certificate of debt is filed.
    Their accounts are then processed in the same manner as other
    delinquent accounts and are not identified as nonfilers. A revenue
    office official told us $695,991 had been collected as of July 27,
    Effect on Compliance           1999. However, he also stated that
    it is too soon to quantify the full effects of the program.
    Officials reported that they had received no complaints from
    taxpayers or Problems/Complaints            opposition from
    interest groups. Revenue office officials told us that the
    disclosure program is only one of Other Tools for Improving
    many tools the state uses to improve compliance and collect unpaid
    taxes. Compliance                     Other tools include project
    letters, field investigations, certificates of debt, levies,
    seizures, and office and field audit programs. The revenue office
    has also used private collection agencies and a special project
    group that focuses upon noncompliants in the cash economy, as less
    traditional tools. Page 19                       GAO/GGD-99-165
    Public Disclosure of Delinquent Taxpayers Appendix II Cities and
    Counties We Surveyed State           City
    County Alabama         Birmingham California      Los Angeles San
    Francisco District of Columbia Delaware        Wilmington Indiana
    Allen Elkhart Marion St. Joseph Vanderburgh Kentucky
    Lexington Louisville                  Fayettte Jefferson Michigan
    Detroit Flint Grand Rapids Pontiac Warren Missouri        Kansas
    City St. Louis New Jersey      Newark New York        New York
    Yonkers Ohio            Akron Cincinnati Cleveland Columbus Toledo
    Oregon          Portland                    Multnomah Pennsylvania
    Philadelphia Pittsburgh Page 20          GAO/GGD-99-165 Public
    Disclosure of Delinquent Taxpayers Appendix III GAO Contacts and
    Staff Acknowledgments Margaret T. Wrightson (202) 512-9110 GAO
    Contacts       A. Carl Harris (404) 679-1900 In addition to those
    named above, Catherine Myrick, Lisa Moore, Stuart Acknowledgments
    Kaufman, and Shirley Jones made key contributions to this report.
    Page 21                   GAO/GGD-99-165 Public Disclosure of
    Delinquent Taxpayers Page 22    GAO/GGD-99-165 Public Disclosure
    of Delinquent Taxpayers Page 23    GAO/GGD-99-165 Public
    Disclosure of Delinquent Taxpayers Page 24    GAO/GGD-99-165
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