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DC Office of Tax and Revenue's Stepped-Up Compliance Efforts Leads to Tax Fraud Sentences and DC Employee Wage Garnishment Friendly Yet Aggressive Tax Agency

Thursday, March 2, 2000

DC Office of Tax and Revenue's Stepped-Up Compliance Efforts Leads to Tax Fraud Sentences and DC Employee Wage Garnishment Friendly Yet Aggressive Tax Agency

WASHINGTON, DC - The District of Columbia Office of Tax and Revenue has rebuilt its image over the last three years as being a role model agency for customer service and efficiency in the District. This year the agency offers free DC tax return preparation; several alternative filing methods, including electronic and telephone filing, and the ability to use credit cards to pay taxes; a one-stop Customer Service Center; extended hours; and numerous outreach programs. Yet, at the same time, Dr. Natwar M. Gandhi, Deputy Chief Financial Officer for Tax and Revenue, believes in strong enforcement to deal with tax cheats who do not pay their fair share of taxes.

Recently, the agency worked with the Office of Corporation Counsel to prosecute two people who were sentenced on various counts of District tax fraud. They also garnished District employees' wages for failure to file and pay taxes and awarded a contract to help the District identify and collect taxes from delinquent taxpayers.

"The honest taxpayer deserves to know that the District's tax agency is working hard to create a level playing field between those who pay taxes and those who try to escape paying taxes," said Dr. Gandhi. "We make it as easy as possible for people to comply with our tax laws. Nevertheless, we are also aggressively pursuing tax scofflaws who cheat the city out of its revenue base."

Two People Sentenced for DC Tax Fraud on Feb. 28
Two people were sentenced in District of Columbia Superior Court on various counts of District tax fraud. Maisha Hyman pled guilty to failure to file and pay taxes for tax year 1996. She was ordered to make restitution to the District in the amount of $3,372 within three years.

Hyman was also sentenced to two consecutive terms of 30 days incarceration, which were suspended on the condition she serve three years of probation and performs 50 hours of community service. Lloyd W. Lamont was convicted and sentenced on one count of tax fraud for attempting to inflate a tax refund for tax year 1996. He was ordered to make restitution to the District in the amount of $5,785 within five years. Also, he was sentenced to the maximum term of one year of incarceration, which was suspended on the condition he serves five years of probation.

District Employees' Wages Garnished for Failure to File and Pay Taxes
The Office of Tax and Revenue has uncovered 2,213 cases in which District employees have either filed but not paid taxes or failed to file and pay taxes for tax years 1995 through 1997, amounting to $5.5 million. As a result, some of these employees have come forward to satisfy their tax bills or make payment arrangements. Other employees have had their wages garnished or will have their wages garnished.

District to Implement Contract to Uncover Delinquent Taxpayers
Each year, it is estimated that the District loses millions of dollars in potential revenue because many individuals and businesses fail to file and pay District taxes or do not report all activities on a tax return. To help close the tax gap, the Office of Tax and Revenue will begin implementing a contract in April with MBIA MuniServices. MBIA MuniServices is a revenue enhancement company that assists municipal governments in identifying businesses and individuals who fail to fully comply with the local tax code. Operating under strict security and confidentiality requirements, the company will contact delinquent taxpayers and provide the necessary assistance and direction on how to file and pay their liabilities.

The Voluntary Disclosure Program
The Office of Tax and Revenue also has established a Voluntary Disclosure Program that invites taxpayers who are not in full compliance with the District's tax laws to come forward on their own. If a taxpayer wants to participate in the Voluntary Disclosure Program, he or she must first contact Thomas Kerwin, assistant audit manager, by telephone at (202) 442-6578 or by facsimile at (202) 442-6883.

The taxpayer must then file all delinquent returns and pay any taxes due, with interest. The Office of Tax and Revenue will waive civil penalties, which may be up to 25 percent of the amount of taxes owed. It is important to note that the taxpayer must have come forward on his or her own free will - without first having been contacted by the Office of Tax and Revenue or its compliance contractor, MBIA MuniServices Company - to participate in this program.