Was leaving RITA a costly mistake?

[Bill Call]

The budget projections provided by Vic Nogalo projected a budget for the income tax department of $1,177,549 in 2006. RITA would have charged the City less than $500,000 for the same services.

Some argued that a centralized collection system would raise more money from tax scafflows. I think that argument confuses the function of collecting tax payments and processing tax returns with the seperate function of audits and collections.

Somewhere in my notes, which I can't find, I had a notation on the difference between the total number of State tax returns filed by Lakewood residents and the total number of City tax returns filed by residents. That number, about 2,500, would be the upper limit on the total number of "missing" City income tax returns.

Since many people are required to file a State return even if they have no income subject to local income tax the actual number of "missing tax returns would be substantially less than the upper limit of 2,500.

Given today's technology it would be a simple task to list the taxpayers that filed a State of Ohio return and not a City of Lakewood return. That list would be the audit population.

This deserves a lot more attention than I am going to give it but if it were me:

RITA would be collecting taxes and processing tax returns, cost $500,000

Paychex would do the payroll, cost $25,000

A third party audit firm would go after the "missing" tax returns, cost 25% commission on delinquent taxes collected.

The current finance department budget is $1,829,754. If you remove the payroll function, the tax collection function and the audit function what is left? Besides $1,304,754?