SALEM - Amnesty runs out Nov. 15 for people who haven't filed or paid city income tax and want to clear up the problem for half the interest cost and no penalty fee.
"If a person has an issue, now is the time to deal with it," city Treasurer Bob Tullis said. "It is vitally important that people contact the tax office."
Tullis appealed to residents during the televised Salem City Council meeting Wednesday night, urging them to take advantage of the opportunity for amnesty before next Thursday, the deadline for the program.
He said if they think they may have an issue of any kind, whether for not filing or for not paying an amount due, they should call the income tax office at 330-332-4241, option 2, or just come into the office on the second floor of city hall.
"We will make every effort to help you," he said in his written report to council.
As part of the amnesty program, tax issues can be resolved at a reduced cost with all penalty charges waived and half of the interest charges waived, a savings that could be significant, he said.
After Nov. 15, penalty and interest charges will be fully charged and a collection agency the city contracted with will begin identifying non-filers and contact them to collect the late taxes, penalty fees and interest. The contract is with the Central Collection Agency through the city of Cleveland Income Tax Department, which has access to federal income tax records that the city of Salem does not and will compare those records with Salem's records to track down city income tax evaders.
To illustrate the difference in a tax bill under the amnesty program and then after Nov. 15, when all fees will be charged, Tullis recounted an example provided to him by city Income Tax Administrator Fred Pamer.
Suppose a 2008 tax return showing $100 due for city income tax was not filed until after Nov. 7, 2012. Since it was due April 15, 2009, it would be 43 months late and cost $254 after adding a $25 late filing penalty, a $64.50 late payment penalty (calculated by multiplying $100 by 1.5 percent by 43 months) and a $64.50 interest charge.
Under the amnesty program, that same $100 tax bill, 43 months late, would cost $132.25 because there would be no penalties and only half the interest. The taxpayer would save $121.75 by taking advantage of the amnesty program.
As of Oct. 31, Tullis said at least 102 taxpayers had filed or paid delinquent taxes, bringing $6,500 in additional tax payments to the city coffers. He also said the income tax office had mailed 565 notices to taxpayers identified by the city as having city income tax non-filing or non-payment issues.
"If you received one, respond quickly. Don't delay," he said.
Tullis explained previously that senior citizens who live in the city who don't have earned income from W-2 wages, rental income, business income or lottery winnings have no tax liability. He said income from Social Security, a pension or investment income is not considered taxable income by the city, but the citizen must register and file at least one time with the income tax department for records purposes.
All city residents 18 years or older are required to file with the income tax office even if they have no income. Besides owing taxes, penalties and interest, city Law Director Brooke Zellers also pointed out that they could face criminal charges for not filing city income tax.
In his written report, which he read to city council, Tullis explained that the income tax is the main source of funding for city operations, recognizing that other funding comes from other sources, but some of those sources are being reduced or eliminated.
With one of the lowest municipal income tax rates in the state, he wrote the city is trying to maintain the same level of services to residents despite reductions in other sources of income and complying with the income tax requirement can offset those losses.
Tullis reported the income tax receipts through Oct. 31 totaled $3,688,861, for an increase of $135,701 or 3.82 percent over last year at this time.
Mary Ann Greier can be reached at firstname.lastname@example.org