Rhode Island’s Most Delinquent Taxpayers
Wednesday, November 02, 2011
The parents of a first-term state lawmaker and a former world champion boxer are among the 100 most delinquent taxpayers in Rhode Island, according to the Division of Taxation's most recent report, filed Tuesday.
In total, the members of the list owe just under $12.8 million in back income taxes to the state, with 33 members owing at least $100,000. Eighteen members currently have out-of-state addresses, including the top offenders, William and Marielle Reilly.
The Reilly’s, who live in Boca Raton, FL, owe $1,372,976.85 in back taxes, according to the state. They are the parents of Daniel Reilly, a Providence College student and Republican State Rep. serving District 72, which spans Middletown, Newport and Portsmouth. The Reilly family has long contended that the state has its figures wrong and is trying to collect on taxes earned after they left the state.GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST
Ronald Acton of North Kingstown is the only other member of the list who owes more than $1 million to the state. Rounding out the top five delinquents are Ronald Dillard ($492,947.09), Thomas Ricci ($379,391.57) and James Grover ($368,853.01).
Can’t Get Blood From a Stone
Also near the top of delinquent list is local celebrity Vincent “Vinny Paz” Pazienza, a former elite boxer who held world titles in two different weight classes. Like many members, this isn’t Pazienza’s first time on the list. The state says he currently owes just over $274,000.
The strategy of shaming delinquent taxpayers into paying their past-due balances by publishing their names is nothing new. Currently 23 states, including Connecticut and Massachusetts, make lists public on the internet.
According to Richard Morrison, Manager of Communications at the Tax Foundation, the strategy probably has some merit to it.
“I don’t believe we've ever studied the effectiveness of publishing delinquency lists, Morrison said. “I’m sure the resulting social opprobrium of becoming known as a tax delinquent has some effect on repayment and/or settlement rates, though I suspect the legal aggressiveness of the state department of revenue and its attorneys is a more immediate motivator.”
But Morrison also noted that the embarrassment of appearing on such a list can only go far. If the individual simply doesn’t have the resources to pay the back taxes, the state will not benefit.
“It depends on whether the individuals put on the list are targeted for both owing significant back taxes and having an assessed ability to repay,” he said. “You can’t get blood from a stone, so posting the names of people with (for example) no savings and significant amounts of debt from other sources won’t get you very far.”
Creating Amnesty Programs Works
According to Peter Sepp, Executive Vice President of the National Tax Payers Union, states do have another issue to worry about when it comes to posting tax delinquent lists: Accuracy. Similar to the federal government, state-level tax agencies have been known to make errors in individual taxpayers' records and because those records involve sensitive financial information, every government that chooses to reveal it needs to have procedures for prompt redress when an error has been committed, Sepp said.
Still, Sepp said while publishing the lists may work, there are other options for states looking to generate revenue from delinquent taxpayers.
“As far as the effectiveness of ‘shaming" programs,’ tax administrators should keep in mind that the carrot can often work as well as the stick, especially for non-filers (compared to delinquent payers),” Sepp said. “This can take the form of an amnesty program that allows citizens to come forward and file or pay with reduced penalties and no prosecution. If the goal is to bring in revenues with less fuss, a properly-designed amnesty program can be a vital part of the mix.”
State Also Publishes Top Business Tax Delinquents
For the first time, the Division of Taxation also posted an additional list that focuses on business taxes owed. In total, the 100 businesses on the list owe the state nearly $16.8 million. At the top of the list is S&P Temporary Help Service, whose owner Cheang Chea was sentenced to 24 months in federal prison last year after pleading guilty to tax evasion, theft from a health care benefit program and mail fraud.
Sixteen companies on the list currently owe at least $200,000 to the state, including Providence-based United Convenience & Petroleum Inc., RI Marble and Granite Inc., and Atlantic Fire Protection in Cranston.
According to Sujit CanagaRetna, a senior fiscal analyst for the Council of State Governments, the reason more states are publishing delinquent lists is two-fold.
“It stems from the objective of collecting as much revenue as possible in an environment where (1) states desperately need the additional revenue and (2) raising taxes is so politically toxic,” CanagaRetna said.
CanagaRetna said states cumulatively have collected hundreds of millions of dollars using the strategy, which appears to be completely legal.
But Is it the right thing to do?
“That involves a value judgment,” CanagaRetna said. “Shaming debtors into paying their debts is a tradition that goes back hundreds of years in England when the names of debtors were prominently displayed in the middle of the town square.”
Each list can be found in its entirety by clicking here.
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