Delaware tries to shame tax delinquents

 

DOVER — About $170 million is owed to the state in outstanding taxes, according to the Division of Revenue.

Every year, the division releases a list of the top delinquent taxpayers, with sums that can exceed $1 million. The list is, in the words of Division of Revenue Director Patrick Carter, a “Hail Mary” designed to “cybershame” people into paying up.

It’s published as a last resort, after the state has repeatedly tried and failed to get in touch with people and companies that owe money.

The division mails a series of three bills “that, if ignored, can start the process of filing a judgment that results in us being able to obtain a lien against that taxpayer,” Mr. Carter said.

A lien allows the government to collect the unpaid sums if the taxpayer sells property, and it can hurt people’s credit.

According to Mr. Carter, the state tries to avoid liens, instead encouraging people to enter into payment plans.

If the offending company or business works with or for the state, officials can “intercept” their checks to satisfy the debts.

Delaware has an agreement with Maryland and the Internal Revenue Service to do something similar for anyone with a delinquency who receives checks from Maryland or the federal government.

Should those methods fail, such as if the state cannot find the owner of a company, the Division of Revenue can send an outside collection agent to attempt to get in touch with the person owing back taxes.

Only after exhausting its other choices does Delaware turn to the public list.

“When we kind of run out of options, we’ve done all these things, we’ve tried all these avenues, what we’re going to do is take the top 100 and post them on the internet,” Mr. Carter said.

The state began publishing the information in 2007, making it one of approximately 20 states that does so.

In Mr. Carter’s estimation, it has been a successful endeavor.

“This program has helped in collecting … 11.9, almost $12 million, since 2007,” he said.

The state can opt not to include someone’s name in the list in the event he or she notifies the secretary of finance of a hardship, such as unemployment.

While it may seem shocking that some people have hundreds of thousands in unpaid taxes, Mr. Carter said those sums are usually the result of a business withholding payroll taxes and not paying them to the state.

Judgments are issued against both the owner and the company to prevent the owner from dodging the delinquency by shutting down the business and then starting a new one.

Some people, deep in a financial hole with no easy way out, have won thousands of dollars in the lottery, Mr. Carter said. Should that occur, the state can take those winnings to satisfy the delinquency.

In the event a delinquent taxpayer declares bankruptcy, a federal bankruptcy court will determine what the individual owes to Delaware. Citing a hypothetical $50,000 owned by someone who seeks bankruptcy, Mr. Carter explained the court may rule only $10,000 has to be paid back. Debt accrued after the bankruptcy declaration is kept, however.

Some of the companies owing hundreds of thousands to the state are no longer in business or are under a new name.

As people enter into payments, their names are removed from the list. The amounts owed vary: One year ago, the top liability was $342,000. This year, six businesses and five people owe more than that.

The people and companies that owe money aren’t limited to Delawareans and Delaware businesses. The 2016 list contains South Carolina, Utah and California addresses, among others.

And that $170 million the state estimates it’s owed? While some of that may be making its way back to Delaware through payment plans, that sum could pay for the Department of Safety and Homeland Security’s annual budget, likely with enough left over to cover the Department of State’s expenses.

 

Tax delinquencies
According to the Division of Revenue, roughly $170 million in outstanding taxes are owed to Delaware. Below is a list of the top delinquent taxpayers, both businesses and individuals, from the 2016 list of who owes the most and has not begun to attempt to satisfy the debt.

Companies
Delmar Homes Inc., Bridgeville, $1,159,344.77
Eagles Transportation Services, New Castle, $691,535.24
American Solutions Inc., Newark, $608,249.22
Shamrock Building Services Corp., Stamford, Connecticut, $444,717.32
Ben-Cen Inc., Wilmington, $414,856.92
Progressive Services Inc., Wilmington, $366,496.59
Unison Health Plan of Delaware Inc., Wilmington, $279,509.06
IK Solutions Inc., Newark, $233,428.72
American Hardscapes LLC, Georgetown, $184,854.89
Ludwig Castillo, Edgewood, Maryland, $159,421.03

Individuals
James R. Gordon, Lewes, $ 1,159,186.15
Stephen Banks, Dagsboro, $517,127.94
Don E. Thomas, Gwynn Oak, Maryland, $410,977.45
Kristin L. Aulenbach, Pocopson, Pennsylvania, $389,816.88
Rafael Maravilla, Georgetown, $378,929.86
Tracy D. Crisco, Viola, $314,773.71
Bruce R. Renner, Saint Georges, $285,095.70
Paul G. Law, St. Dillon, South Carolina, $258,810.02
Earnest L. Boyles Sr., Clayton, $257,543.92
Peter D. Coker, Dover, $251,491.93

Reach staff writer Matt Bittle at mbittle@newszap.com

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