EAST PROVIDENCE — At the Budget Commission meeting held Thursday afternoon, Nov. 15, City Manager Peter Graczykowski updated the state over-seers on the status of the Income Tax Refund Offset Program East Providence is using to collect what was once nearly $11 million in debts from delinquent taxpayers.
The Income Tax Refund Offset Program was set up by the State Division of Taxation last year and East Providence remains the only city or town in Rhode Island to take part, according to Commission chairman Diane Brennan.
As of Oct. 1, the city was owed $10,900,338.83 from home and business owners in arrears for outstanding property, tangible and car taxes as well as water, sewer and cleaning bills. Through the offset program, East Providence collected $1,248,262.34 or 11 percent of the total through Oct. 31.
Mr. Graczykowski and John Cimino of the City Finance Department agreed the number collected continues to change on a daily basis and is likely to have grown a bit larger two weeks into November. The some $8.7 million left in delinquent debts will be forwarded to the state on Dec. 1 for further action.
“We hope to get at least an additional $300,000 from the state (income tax) garnishment program,” Mr. Graczykowski, also a Budget Commission member, said.
According to the outline he presented Thursday, the first step in the process is for the city to notify each debtor of its intent to follow up on their case and submit their information to Department of Taxation. The debtor is also told of their right to appeal the matter.
East Providence sent out nearly 10,000 letters to delinquents, accounting for the roughly $11 million in monies owed to the city. The Income Tax Refund Offset Program allows East Providence, through the state, to garnish the income tax returns a debtor may be due in order to settle its outstanding account(s) with the city.
The subject of delinquent debtors is a sore topic to some in the city, who claim nepotism and cronyism has and continues to allow people, including high-profile land and business owners connected to local politicians, a chance skirt the system.
Mr. Graczykowski said he was aware of those sentiments, adding the offset program, while not the only way East Providence is dealing with the matter, is the best way for the city to go about collecting on debts.
“Our other means of recourse are to put a lien in place on the property or to have a tax title sale. Our hope is that going through the offset program we can basically get the full amount people owe the city without having to go through either one of those processes,” Mr. Graczykowski explained.
He continued, “If we do take over the property, then we have to wait for it to sell to collect the money. And we also have to pay the costs to the legal firms who oversee the sale. We pay nothing to the state for this program. We get all the money. Our collection processes are ongoing, but this offset program is the cleanest, most cost-effective way for us to go about it.”