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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