Friday, December 23, 2005

Latest tax tool: 'Internet shaming'

Latest tax tool: 'Internet shaming'
By Ben Jones, USA TODAY

Tax scofflaws, beware. State governments are combining new technology with old-fashioned shame to goad delinquent taxpayers to pay up.

At least 18 states have launched websites to post the names of people and businesses that owe back taxes. Maryland calls its website "Caught in the Web." In South Carolina, it's "Debtor's Corner." Wisconsin on Jan. 3 will launch "website of Shame."

Advocates of so-called Internet shaming say it's an inexpensive way to capture millions of dollars at a time when many states have tight budgets and seek politically viable ways to find more revenue.

"Raising taxes is a very radioactive strategy," says Sujit CanagaRetna, a fiscal analyst with the Council of State Governments, a non-partisan group that provides policy information to states. "This is another way to bring in more (of) what is owed to the state in an innovative way that has proven to be fairly successful. It's gathering more popularity across the country."

Georgia's online delinquent tax list has collected at least $19.6 million since it went up in February 2004. Colorado's website has raked in $11 million. Kansas went online in March.

"NOTICE OF PENDING INTERNET POSTING," began the letter the Wisconsin Department of Revenue recently sent to more than 7,000 people and businesses who owe the state at least $25,000 each in sales, income, corporate or other taxes. Wisconsin is owed $771 million in back taxes, about 7% of the $11.5 billion it collected last year. The state isn't expecting the website to recoup all of it. Its goal: $1.5 million a year.

The threat of online exposure is working. At least 88 Wisconsin residents and 21 businesses have agreed to settle debts totaling $7.9 million. "The real success of the program is before the postings are made," says Geraldine Conrad, spokeswoman for the Illinois Department of Revenue. "People are motivated to pay."

Some tax specialists worry about the Internet shaming trend. "How are people going to be compensated when, inevitably, mistakes are made?" says Pete Sepp, spokesman for the National Taxpayers Union, a non-partisan watchdog group.

Jones reports for The Post-Crescent in Appleton, Wis.