Delinquent taxpayers soon could be in for a surprise, because a local legislator is looking to redirect their income tax refunds.
Legislation being written by Rep. Seth Grove, R-Dover Township, would create a new "Delinquent Tax Intercept Authority" to help local taxing bodies, including school districts, collect on debts that create revenue holes to be filled by those who actually pay on time, he said.
Delinquent taxpayers who might otherwise expect a refund from their state or federal income taxes could find the authority, along with the governor's office and the U.S. Treasury, redirecting the money to the local taxing body that wasn't paid.
Whether Grove's proposal is a good idea might depend on whether one owes back taxes, said Joel Sears, president of York County Taxpayers Council and a member of York Suburban School Board.
As a budgeting board member and a man who represents people who pay their taxes, Sears said it "sounds pretty good, frankly."
Disparity: Sears said the school district budgets are based on a collection rate of about 95 percent, because about 5 percent of the money owed isn't collected on time. Because much of that money is never collected, the school district enters the next year with a deficit that's closed by increasing taxes. In the 2012-2013 school year, the hole in Suburban was $1.14 million, according to the state Department of Education.
"Those who do pay are picking up the tab for those who don't," Sears said.
It's the same concept behind retail prices, inflated because retailers know a certain percentage of their merchandise will be stolen but they don't want to take the hit on their bottom lines, he said.
And while there's a lengthy and costly process to collect back taxes, Sears said the seizure of a tax refund would "certainly get the delinquent taxpayer's attention."
He said he would like the school district to be able to capture money owed by businesses, which have accounted for substantial delinquencies in Suburban. Under Grove's proposal, businesses that owe taxes are considered "taxpayers," so their Internal Revenue Service business number could be used to seize their federal tax refund, Grove said.
Another view: While Sears likes the idea, President York County Commissioner Steve Chronister said the measure would constitute government intrusion into personal lives.
"If you're going to take their refund, you might as well garnish their wages," Chronister said. "We don't know all the reasons why a person didn't pay their taxes. Maybe that income tax money will go to pay their property taxes, but maybe it will go into something else. There are mechanisms already in place to make people pay their property taxes."
Proposal: Grove, who plans to introduce the bill within the next week, said the proposal is an expansion of an existing agreement through which the state and federal governments collaborate to collect income taxes. That agreement generates about $33 million per year for the state.
He estimated the proposed expansion would generate $154 million for school districts statewide, and $125 million for the city of Philadelphia alone. York County and all local municipalities, including York City and townships and boroughs, could use the authority to collect delinquent taxes, he said.
Grove said the refund seizure is "a better solution to tax collection, and it makes sense instead of somebody owing taxes to a government entity and getting a tax refund."
In cases where the delinquent taxpayer wasn't due a refund, the school district could use the normal procedure to compel payment, including forcing a tax sale, which Grove said is counterintuitive.
"If nobody buys the house, it sits there vacant, bringing in no tax money," he said.
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