Members of London City Council were on the receiving end of a strong sales pitch from an income tax billing and collection agency on Monday, April 21.
In a presentation before council’s finance committee, Chuck Hawk of Cleveland-based Ohio Regional Income Tax Agency (R.I.T.A.) said the city could save $142,000 annually by contracting with R.I.T.A. for services.
London’s tax department currently employs a director, assistant director and full-time specialist.
The future of those jobs was vague under a R.I.T.A. contract.
However, London would retain a local “tax administrator” position, Hawk said.
Council members listened, asked questions and agreed to consider the proposal.
According to agency documents, R.I.T.A. handles income tax billing and collection for 237 Ohio municipalities and Joint Economic Development Districts. Both Mt. Sterling and South Solon in Madison County contract with R.I.T.A. for services.
Hawk said the nonprofit, quasi-public organization handles every aspect of income tax services from identifying eligible taxpayers to collecting delinquencies. Electronic filing is available.
R.I.T.A.’s fee is based on a formula and runs about 3 percent of a client’s total income tax collections. In London, that cost would be $112,000 to $125,000, Hawk estimated.
R.I.T.A. clients pay extra for subpoenas and attorney services in court. Subpoenas delivered to delinquent taxpayers via U.S. Mail cost $8 each; court time runs $35 per hour. However, clients may refer that work to their city attorneys and village solicitors, Hawk said.
If the pitch seems too good to be true, Mayor Dave Eades says it is.
“He (Hawk) wasn’t counting refunds,” Eades said.
Refunds to city taxpayers for 2013 are budgeted to run $80,000. Subtracting those dollars from the projected $142,000 in savings through R.I.T.A., leaves $62,000 to cover the salary and benefits of a local tax administrator.
“It’s about a wash,” Eades said.
He’s also skeptical of R.I.T.A.’s 3 percent fee, noting it is re-evaluated annually and can fluctuate.
Costs associated with enforcement, including subpoenas and attorney fees, also concern Eades.
“They don’t tell you the price until you sign a contract,” he said.
Eades will formally present his reservations regarding R.I.T.A. to council members at the group’s May 1 meeting.
Jane Beathard may be reached at (740) 852-1616, ext. 16 or via Twitter @JaneBeathard.