Disclaimer: I’m not an attorney, nothing in this article should be considered legal advice. Use the information in this article to educate yourself about relevant state law and city ordinances. Empower yourself to protect your rights.

Is the City of Delaware Income Tax Department ignoring state law and the Ohio Constitution and intentionally deceiving residents of Delaware Ohio?  Or are the City of Delaware Income tax Department employees not familiar with Ohio Municipal Income Tax laws?

For years, the City of Delaware Income tax Department has demanded past taxes be filed, and sometimes when they were lost, re-filed, for an unlimited number of years in the past.

When questioned about a statute of limitations, the Municipal Income Tax Department has consistently said, both verbally and in writing, that there is no statute of limitations in Ohio.  Furthermore, they have went on to say that the City of Delaware has passed ordinances that allow them to collect all tax due, from any year.

The problem with this is, there is in fact a statute of limitations on city income taxes in Ohio.  To be more specific, the State of Ohio has passed laws that put a very specific limitation on a cities ability to prosecute for failure to file a municipal tax return, and has limited their ability to legally pursue a taxpayer for failure to pay taxes after filing a return.

What does this mean?

If you don’t file a city tax return, the state has empowered the cities to arrest any resident for failure to file a return.  However, and this is a big however, by state law, the city must begin any prosecutions within 6 (six) years of the date the tax return was due.  That means that by state law, the city only has the authority to prosecute you for failure to file for 6 years after that return was due.

There is no provision in this state law that allows a city to pass ordinances to supersede the state imposed statute of limitation.

In cases where a resident has filed a city tax return but not paid the taxes, the city only has the authority to prosecute for failure to pay taxes, for 3 (three)years. Three years after that tax was due, the city has zero authority to prosecute a resident for failure to pay taxes.

In neither case does the law specifically say that taxes are forgiven, but if the city is unable to legally prosecute or purse a resident, then there is little difference.

Many times, the city income tax department has been specifically asked about this statute of limitations.  Consistently, the city tax department has stated that there is no statute of limitations and that city ordinance allows them to pursue all taxes due.

A letter from a city resident that specifically inquires about the statute of limitations:

October 31, 2008

Lory Jonhson
City of Delaware
Income Tax Department
1 S. Sandusky Street / P.O. Box 496
Delaware, Ohio. 43015

RE:  [account # redacted]

Dear Ms Johnson:

I received your letter along with the tax returns.

After much investigating and questioning, I have learned that according to the IRS  and the legal system, past taxes can only be pursued for three years or six from present date.  So that would apply only to the years 2002, 2003, and 2004.

At this point in time, given the fact that I retired last year and the spiraling economy, like everybody else, I am struggling to get through this possible recession.  I am very hopeful that in the coming year, with the promised increase in social security, that I will be able to begin making payments.

Thank you very much for your patience.

Sincerely,

[taxpayers name redacted]

And the City Income Tax Department’s reply:

NOV 07, 2008

Dear Sir or Madam,
In response to your inquiry of the City of Delaware Income Tax Department:

IN RESPONSE TO YOUR LETTER DATED 10/31/08
DELAWARE CITY ORDINANCE ALLOWS THE INCOME
TAX DEPARTMENT TO ENFORCE FILING COMPLIANCE
AND PAYMENT OF INCOME TAX OWED FOR ANY AND
ALL YEARS THERE IS A LIABILITY. THERE IS NO
STATUTE OF LIMITATIONS. AS SUCH, YOU ARE
LIABLE FOR THE BALANCES DUE (1999 – 2004).
AFTER DISCUSSING YOUR LETTER WITH JOHN HUNTER,
CITY INCOME TAX ADMINISTRATOR, HE SUGGESTED A
PAYPLAN BE SET AT $10 PER MONTH. PLEASE CALL OR
WRITE OUR OFFICE TO DISCUSS. WE WOULD LIKE TO WORK
WITH YOU AS BEST WE CAN TO ACCOMMODATE YOUR FINANCIAL
SITUATION WHILE STILL ADDRESSING THE BALANCE DUE.

If you have any questions, please call our office at 740-203-1225
Sincerely

Lory Johnson
(740) 203-1225
City of Delaware
Income Tax Department

See both original letters here:

Click each thumbnail to open a full size .pdf in a new window.

Are they (the City Tax Department) really saying that the City of Delaware has the authority to pass an ordinance that allows them to ignore state law?  City ordinance 191.99 (b) specifically acknowledges and claims to honor time limits on prosecutions.

If a taxpayer would have blatantly told a lie to influence the amount of taxes paid, it would have been considered fraud.  Since the City of Delaware Tax Department has intentionally deceived a taxpayer to influence them to pay more taxes, isn’t that also fraud?

How many other City of Delaware residents have been threatened and deceived into paying back taxes, including interest and penalties, that they city had zero authority to prosecute for?

While I believe that every city resident that uses city resources should pay taxes, we need to know that the City of Delaware will honor state laws and we need to be able to trust those who we ask questions and expect honest answers.

On July 6, 2009 I spoke to City Attorney Dan Bennington and Councilman DiGenova about this issue. Mr Bennington was very non-committal, and Councilman DiGenova appeared to be genuinely surprised. Both promised to investigate the situation and get back to me.

At the City Council meeting on July 13, Councilman DiGenova mentioned the issue and Mr Bennington replied that it was still being looked into.

These collection tactics have been ongoing for years, so it’s conceivable that city council members were unaware of this situation. I’ll give them the benefit of the doubt.  But now they are aware of the situation.

I think the city will have a quandary on their hands. I believe that many city residents have been mislead by the City Tax Department, and I also believe that once residents find out that there is in fact a statute of limitations, there will be some angry people.

City Council should take these actions:

1. Thoroughly investigate the collection tactics used by the City Tax Department.  If found to be deceptive, unethical or not in compliance with state law, legal action should be taken against the City Tax Administrator.  If City Council can’t or won’t conduct an investigation, then the County Prosecutor has the authority to request an investigation by the Ohio Attorney general’s office.

2. There needs to be full public disclosure of any investigation.

3. Any collection actions outside of the state mandated statute of limitations need to immediately cease.

4. Any past taxes collected by use of these deceptive and possibly illegal tactics, should be refunded or forgiven.

5. City Council should pass ordinances that specifically prohibit deceptive, aggressive or unethical collection methods.

What can you do?

If you have received letters from the Delaware Ohio Tax Department that have demanded filing or paying outside of the statute of limitations:

1. Read the Ohio Revised Codes and City ordinances and make yourself familiar with the applicable laws.

2. Contact your City Council representative

3. Contact the City Managers office.

4. Contact the Delaware Gazette.

5. Contact your State Representative and Congressman (let them know laws they are passing are being ignored)

6. Attend City Council meetings to voice your concern.

See “resources” link at top of page for contact information.

http://codes.ohio.gov/orc/718.12

718.12 Statute of limitations.

(A) Civil actions to recover municipal income taxes and penalties and interest on municipal income taxes shall be brought within three years after the tax was due or the return was filed, whichever is later.

(B) Prosecutions for an offense made punishable under a municipal ordinance imposing an income tax shall be commenced within three years after the commission of the offense, provided that in the case of fraud, failure to file a return, or the omission of twenty-five per cent or more of income required to be reported, prosecutions may be commenced within six years after the commission of the offense.

(C) Claims for refund of municipal income taxes must be brought within the time limitation provided in division (A) of this section.

(D) Interest shall be allowed and paid on any overpayment by a taxpayer of any municipal income tax obligation from the date of the overpayment until the date of the refund of the overpayment, except that if any overpayment is refunded within ninety days after the final filing date of the annual return or ninety days after the complete return is filed, whichever is later, no interest shall be allowed on the refunded overpayment. For purposes of computing the payment of interest on overpayments, no amount of tax for any taxable year shall be treated as having been paid before the date on which the tax return for that year was due without regard to any extension of time for filing that return. The interest shall be paid at the rate of interest prescribed by section 5703.47 of the Revised Code.

Effective Date: 07-26-2000

Delaware Ohio City ordinance that acknowledges statute of limitations:

http://www.conwaygreene.com/Delaware/lpext.dll?f=templates&fn=main-h.htm&2.0

191.99 PENALTY.
(b)     Time Limitations on Prosecutions.  All prosecutions under this chapter shall be commenced within the time limits provided in Ohio R.C. 718.12.

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