Akron is offering an amnesty program for local businesses that have collected income taxes from their employees but then not paid them to the city.
The city plans to go after companies that don’t step forward.
“That’s beyond just tax problems,” Akron Mayor Don Plusquellic said during a news conference Tuesday. “That’s fraud.”
The amnesty program will be offered to businesses in Akron and the joint economic development districts from March 5 through May 4. Businesses will be permitted to pay the taxes and interest they owe without penalties and may be able to make payments over time.
Plusquellic said he isn’t sure how much the effort will generate, but is hoping it will be in the millions. Akron collects $112 million to $114 million in income taxes — the city’s primary revenue source — annually.
“We estimate in the millions,” he said. “How many? We don’t know.”
Other cities, including Toledo, Dayton, Cincinnati and Lakewood, that have offered tax amnesty programs have collected between $1 million and $1.5 million, said Don Smith, Akron’s tax commissioner.
Smith said a cursory review over the past 90 days showed 10 to 12 businesses that failed to file returns and owe more than $250,000 in taxes, interest and penalties.
Akron plans to go back to “Day 1” of when businesses should have been paying income taxes but weren’t, Plusquellic said.
“We have the right to go after them,” he said. “They have our money. We will go back as far as possible.”
Smith said the debt could involve personal income taxes employees are required to pay or taxes businesses must pay on their net profits. Akron’s income tax rate is 2.25 percent. Residents receive credits of up to 2.25 percent for taxes paid to other municipalities.
The mayor expects the effort to result in minimal additional expenses. He said if the response is overwhelming, the city might have to temporarily hire more employees to meet the demand.
Akron last offered an amnesty program in 1988 when the city first began requiring taxpayers to file income tax returns.
The city’s new effort is focusing on businesses that owe back income taxes, though individual taxpayers who haven’t properly paid also may step forward, Plusquellic said.
After the amnesty period, Akron will go after delinquent businesses and taxpayers by matching information with state and federal records through a recently formed partnership with Cleveland and the Central Collection Agency.
“With this new system, we will find people who have outstanding debt,” Plusquellic said. “It’s not personal. It’s business.”
Those seeking amnesty may contact the city’s Income Tax Division by email at amnesty@akronohio.gov or call 330-375-2522. Additional information, including questions and answers on the program, is available on the city’s website at www.akronohio.gov.
Stephanie Warsmith can be reached at 330-996-3705 or swarsmith@thebeaconjournal.com.