Cleveland Has Doubled Down on Collections of Unpaid City Income Taxes

The Bibb administration is also working harder to collect on delinquent debts, like unpaid parking tickets and ambulance fees

click to enlarge CFO Ahmed Abonamah addressing City Council about the need to ramp up income tax collection efforts. - TV20
CFO Ahmed Abonamah addressing City Council about the need to ramp up income tax collection efforts.

The letters from the Cleveland Division of Taxation began arriving en masse late last year to those who owe back taxes, or haven't filed at all in recent years, and haven't stopped.

While the city continues to try and rope back suburban office workers to their former Downtown offices, the city has been amping up  efforts to collect as much unpaid income tax as it can.

Since late 2022,  the department has been leveraging a new ordinance, passed in October, that allows the city to seek outside help to pursue not just the tax delinquencies but a wide range of outstanding debts: parking tickets, EMS fees, court costs, etc.

As council and the Mayor's Office chisel through hours and hours of budget debate, the city has tapped Attorney General Dave Yost's office ramp up pressure on those who owe the city money. Meaning: Yost's office could aid the Central Collection Agency (CCA), the agency in charge of income tax collection, in bringing the tax-delinquent to court, in both civil and criminal cases.

The extra push to collect money where money's due has led to a minor wave of confusion from some city residents, who've received letters in the mail requesting payments. Some simply didn't know they had to file a city tax form; others might have been stymied by an outdated system.

Chief Finance Officer Ahmed Abonamah, in a speech to council at February 14th's hearing, framed such an effort with Yost's office—along with "modernizing the tax filing system"—as a key to maximizing the General Fund.

"These are all efforts to kind of capture what has historically, or should be coming to the city," Abonamah said to Council President Blaine Griffin, who sponsored the October ordinance. "On the other side, it's like, 'How are we gonna try to grow the pie?'"

The CCA's rate for workers with a Cleveland address is 2.5%, one of the highest in the state.

Such money garnered, said CCA Administrator Kevin Preslan, flows through the agency into either the city's General Fund or the Restricted Income Tax revenue fund.

As of February, according to the Mayor's 2023 Budget Estimate, income tax collection makes up 66% of the General Fund, a majority reliance that's been the case for the past two decades. Cleveland has one of the highest rates in the state at 2.5%.

One-ninth of income tax collection feeds the Restricted fund, which is used to source special city projects—like, say, the Progressive Field renovation—or to chip away at the city's debt. Fines and interest feed directly into CCA's operation.

It's why, Preslan said, the city getting all it's due is paramount, especially coming out of the financial curveball that was COVID-19. Though he did not specify a number, Preslan and CCA sends "thousands" of notices out to Clevelanders, a good portion of which may now work from home in the suburbs.

Which the state, he said, will help with.

"We have a significant amount of delinquencies," Preslan told Scene. "And this is just a way to get caught up quicker, in a sense, because we have far more limited resources, and quite honestly, tools than the state has.

"They have access to more information, they have different methods that we can use," he added. "So it's just more effectiveness. Increasing the collection rate, I guess, is the way that, like any other bill, it's just a way for us to basically increase that collection rate to get it to as close to 100% as possible."

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Mark Oprea

Mark Oprea is a staff writer at Scene. For the past seven years, he's covered Cleveland as a freelance journalist, and has contributed to TIME, NPR, the Pacific Standard and the Cleveland Magazine. He's the winner of two Press Club awards.
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