London okays contract with Cleveland for tax collection

(Posted Aug. 28, 2014)

By Kristy Zurbrick, Madison Editor

In a 5-1 vote, London city council approved a contract with the city of Cleveland for the collection of income tax owed to London by people who under-report their income or don’t report it at all.

Rex Castle, Trint Hatt, Rodney Lauer, Roger Morris and Jason Schwaderer voted in favor of the contract at the Aug. 21 council meeting. Dick Minner voted against it. Steve Scaggs was absent.

Cleveland’s Central Collection Agency has access to Internal Revenue Service (IRS) cross-reference data that can identify under-reporters and non-reporters for any municipality. The access is granted to cities with populations of 250,000 or more. Cleveland provides the collection service to smaller cities. The cost is 5 percent of the amount of taxes they collect.

London’s tax department will continue to operate as usual, handling all other tax collections and tax-related business for the city. Cleveland’s work pertains only to the IRS records to which London does not have access on its own.

In recent months, council also has considered taking another route with its tax collection. Minner sponsored legislation calling for a contract with RITA, the Regional Income Tax Agency. RITA is a company that offers tax collection services for municipalities in Ohio. Unlike the Cleveland deal, the RITA contract would be for collection of all of the city’s income tax, not just that of under-reporters. The city would retain a tax office presence locally, but on a much smaller scale than the current staffing of three employees.

Minner argues that RITA could do the tax collection work more efficiently.

Randy Courter, London’s income tax director, disagrees. In a statement to council, Courter outlined the various tasks his office does, some of which are: processing payments daily, issuing refunds, processing and auditing all final returns, providing consultation for London City Schools income tax returns, updating landlord tenant information, distributing the tax money that is collected, mailing employer withholding forms, opening new and maintaining existing accounts, and pursuing payment on delinquent accounts. The office also assists taxpayers with filing annual returns. In the first 15 days of April 2014, the office helped to file 500 returns.

“In total, for tax year 2013, just under 23,000 transactions were processed by our office,” Courter said.

The proposed RITA contract remains a piece of legislation on council’s agenda. Council has not yet voted on it.

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