Controller Finds Tax Fraud

Here's the release:

Butkovitz’ Fraud & Special Investigations Unit
Provides City $1 Million in New Tax Dollars in 2009
Controller’s findings include beer distributor that now owes $218,000 for business taxes

PHILADELPHIA – With the April 15, tax filing deadline one day away, City Controller Alan Butkovitz released a list of tax revenues and savings totaling over $1 million that was generated by his Fraud & Special Investigations (FSI) unit in 2009.

According to Butkovitz, "Our FSI unit uncovered more than $700,000 from companies that were conducting business in Philadelphia, but not paying city taxes. We uncovered a beer distributor in Northeast Philadelphia that failed to file for any business license and now owes the City $218,508 in back taxes."

“All businesses, no matter the size or amount of profits earned, operating or conducting business within the City must file all appropriate taxes,” said Butkovitz.

The Controller’s FSI Unit found that a for-profit contractor for a state project located in Northeast Philadelphia had not filed with the City and is now on the City’s tax records for owing $181,000 for the project.

Along with hundreds of thousands of dollars not filed for business taxes, FSI uncovered a total of $295,441 in improper property tax assessments. One case involved an individual who was receiving a 100 percent property tax exemption even though the property owner was receiving rent from a charter school. Since the individual owned the property and received rent from the charter school, the Controller notified the Board of Revision of Taxes and it reassessed the property with the individual now owing the City $217,794.

“The City needs to investigate all properties that are receiving a 100 percent tax exemption and make sure that property owners are not operating a for-profit entity on what is considered to be a tax exempt property,” said Butkovitz. “When property owners abuse the system by falsely claiming a property tax exemption, it hurts the organizations that are entitled to the tax exemption.”

A few other findings from the Controller’s FSI Unit include:
-$105,964 – due to another charter school’s failure to pay city wage taxes and business taxes
-$75,000 - an improper property tax assessment at Imani Education Circle Charter School
-$69,000 – a construction company conducting business within the city and failing to pay city wage and business taxes
-$26,000 – failure to pay city wage taxes from a city employee not residing in the city and from two Amtrak employees failing to file; this investigation is currently part of an on-going investigation that could result in an additional $1.4 million

To view more investigations conducted by the FSI Unit as well as audits and reports issued by the Controller’s Office, please visit www.philadelphiacontroller.org.

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