Defiance city officials are ready to implement a new program they hope will help collect unpaid municipal income taxes and utility bills.
City council is expected to consider an ordinance during its meeting at 7 p.m. Jan. 28 in the city service building, 631 Perry St., that would authorize a contract with the Defiance-based firm Credit Adjustments for this purpose.
Under the proposal, Credit Adjustments would handle all the work in tracking down these delinquent accounts, and tack fees and charges of 35% above the unpaid amounts, according to Defiance city Finance Director John Lehner.
City officials hope to implement the new system around Feb. 1, so those who are in arrears can pay off their balances at no charge before that date, Lehner indicated this week.
The total amount owed and targeted — between unpaid city income taxes and utility bills — is approximately $450,000, according to Lehner.
This includes some 750 delinquent income tax accounts amounting to about $260,000 and 817 utility customers totaling $194,300.
Lenher said the income tax accounts go back to 2012, while the utility accounts are backdated to tax year 2011.
In the cases of delinquent utility accounts, he concedes that these will be more difficult to collect because these represent people who’ve changed their addresses — mostly rentals — and may not live in Defiance any longer. Those delinquent on their utility bills who still live in Defiance face having their water shut off, rather than be sent to collections.
On the income tax side, the city has chosen in recent years not to prosecute these people in Defiance Municipal Court on a misdemeanor charge of failure to pay.
“To me it’s not worth the effort to send the tax commissioner or (Law Director) Sean (O’Donnell) to the municipal court, and now I have somebody to do that on our behalf at virtually no cost to us,” said Lehner. “Anything they (Credit Adjustments) collect is a bonus, and they’re professionals.”
Too, he noted that “it’s a process that most cities have in place, and we should have in place. ... A positive is we have an agency right in town.”
Credit Adjustments is located on Florence Avenue on the city’s east side, but is building a new headquarters on Latchaw Drive, due south of ProMedica Defiance Regional Hospital.
Lehner observed that the $260,000 or so owed in city income tax is a very smaller percentage of the total paid. He figured that in the timeframe being targeted — from tax year 2011 until now — the city has collected some $70 million in income taxes, thus leaving only about 0.3% unpaid.
O’Donnell stated that the city is “not forgoing our right to use any means at our disposal, including the criminal remedies from the tax code, to pursue delinquent taxpayers. There may still be cases that warrant criminal prosecution. Rather, we are following the old adage: ‘Don’t throw good money (and time) after bad.’”