NWOTCA

Meeting Date: 11/9/2010

Call to Order

The meeting was called to order at 9:30 A.M. in Rossford.

Updates on legislation/OML

No news from the OML or on new municipal legislation. Angie Kuhn (Sylvania) is expecting additional movement on legislation impacting given the emphasis on Republican wins last Tuesday.

Seminars

The preparer seminar last week resulted in a low number of preparer attendees (31 tax preparers) but the reason for the low turnout is in question.

The tax staff seminar again received good feedback and those in attendance indicated it would be good to have one again for 2011.

Andrew Thomas’ (Findlay) handout of the 12 day rule flowchart was handed out for all to review for any changes before a final draft is posted on the website. All are asked to look over the material as well as to reference IRC 3231(e)(1), ORC 5747D, and ORC 718.03, 718.011 to determine whether sole proprietors are to be included in the 12 day rule. Results of reviews will be discussed at the January NWOTCA meeting.

Also handed out was Andrew’s attachment checklist of forms and schedules from federal tax returns that need to be included with local returns. All are asked to review to find common ground and respond to Angie or Andrew so an update can be posted on the NWOTCA website.

Rob Wright (Bowling Green) said he was aware of a court case whose decision denied cities from requiring the Federal 1040. He will see if he can locate the case and forward to Angie.

Also discussed was the IRS data access that is now available to agencies like RITA and CCA who process tax information for multiple municipalities. While RITA requires full membership with tax processing to access federal data, CCA allows a more casual relationship that may only include a city’s records accessed to compare with federal data. Stringent security measures must be undertaken by the agency offering this service.

New Business

Dates and locations for 2010 are tentatively as follows:

January 11 Perrysburg

February 8 (work session) Sylvania

March 8 Whitehouse

May 10 Archbold

September 13 Port Clinton

November 15 Oregon

Note that the date for the fall staff seminar has not yet been set but should be in September or October.

Angie asked for proposed topics of discussion or for speakers for upcoming meetings. Jim Neusser is expected to finish ordinance topics at the January meeting. It was suggested that for either a work session or for the staff seminar that a speaker be brought in to cover phone etiquette, customer service, letter writing, and dealing with difficult people. Another suggestion was to seek a tax issue that our group of cities could achieve uniformity in an effort to move toward this goal so often targeted by the OSCPA and legislators.

Louis Yopollo, bankruptcy attorney, addressed the group discussing bankruptcy issues as they relate to local taxes. Chapter 7 is a liquidating procedure for repayment of debt. There is not a payment plan established for repayment of taxes. Proof of claims need to be filed with the court for “asset cases.” Assets are then liquidated for repayment of debt.

Chapter 11 is a business reorganization plan set by and monitored by the court. Tax claims must be paid within 5 years of the date of filing. Proof of claim is filed with the court to be sure the balance is included in the plan.

Chapter 13 covers individual wage earners, establishing a plan for repayment or discharge. Proof of claim is filed to determine balances eligible for discharge or not. Tax balances must pass a test that looks at aging of return filing, aging of assessment, fraud, tax evasion and the like. Note that tax is given a higher priority than penalties assessed. Proof of claim must separate these out for the court. Other items like bad check fee, court costs, and administrative fees receive priority treatment.

Upon filing of the start of bankruptcy, an automatic stay on all collection notices is in force. All creditors must refrain from sending any balance due notices. This can present a challenge to cities that receive tax returns during the bankruptcy period and adjust the return, altering the balance due. Sending a notice of adjustment could risk law suit. Louis suggested filing an amended proof of claim with all attachments to John Gustifson, Trustee, instead of sending notice to the taxpayer. If sending notice to the taxpayer, it might be acceptable to add wording to the notice that the statement is simply to inform of a balance change and not an attempt to collect a debt. Cities can monitor cases on court websites to see if the debtor is making payments. If the debtor stops making payments, the case can be dismissed and the cities can go back and fully collect outstanding balances.

It is important for debtors to have all tax returns filed according to the bankruptcy code. While the debtor’s attorney may not take seriously outstanding local return filing, cities can inform the courts of outstanding returns. This could be grounds for dismissal if not remedied.

Chapter 11 business reorganization cases are court established plans for repayment and during this time, the taxpayer must stay current with all subsequent obligations or risk dismissal. Claims not filed with the court are discharged upon completion of the plan.