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Owe Chicago money? City could take tax refund under proposal

Parking ticket scofflaws could have their tax refunds seized under proposal Chicago. PhoBy Thomas Delany Jr./Chicago Sun-Times.

Parking ticket scofflaws could have their tax refunds seized under a proposal in Chicago. Photo By Thomas Delany Jr./Chicago Sun-Times.

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Updated: March 16, 2012 8:10AM

More than 100,000 Illinois residents and businesses with overdue Chicago parking tickets, red-light camera citations and judgments rendered by city hearing officers would have their debt siphoned from their state income tax refunds under a crackdown advanced by a City Council committee Tuesday.

Chicago could be in line for a windfall of $8 million to $20 million thanks to a new partnership with the state that will put a “brick” on the state refunds of anyone who owes the city money, according to Tina Consola, managing deputy of the city’s Department of Finance.

The tool already has been authorized by the Illinois General Assembly. Chicago is simply moving to take advantage of it to whittle down its mountain of debt.

The debts in question date back to 2005. In the case of parking and red-light tickets, motorists targeted have received and ignored several warning notices.

The judgments rendered by city hearing officers run the gamut from false burglar alarms and building code violations to citations issued by the city’s Department of Streets and Sanitation.

If the debt owed by an individual or business is larger than the state income tax refund, the claim would remain on the books for five years, giving the city an opportunity to take another bite each year until the debt is paid.

In every instance, the state would take $15 off the top as a collection fee. No debt is too small to trigger the collection efforts.

The Budget Committee approved the ordinance, but not before several aldermen urged the city to send out final warning notices alerting deadbeats to the new tool in the city’s arsenal. Consola said the city was exploring that possibility.

Also Tuesday, Mayor Rahm Emanuel moved to put more money into the pockets of working families — by protecting them from unscrupulous tax preparers.

Every year, commercial tax services pick the pockets of Chicago’s working families — primarily single mothers eligible for the Earned Income Tax Credit — by prodding them to sign up for refund anticipation loans and checks without disclosing hidden fees tied to those instruments, city officials said.

According to the mayor, that drives up tax preparation costs by $47.2 million a year — or $100 to the average low-income family.

The ordinance that Emanuel plans to introduce at Wednesday’s City Council meeting would mandate full disclosure of those hidden fees with simple forms in the customer’s native language.

Tax preparers would be prohibited from steering customers to high-cost refund products or compelling people to use them before returns are prepared.

But what about that brick the city is preparing to place on scofflaw state income tax refunds?

Isn’t the city giving struggling taxpayers a gift with one hand and taking it away with the other?

That’s now how the mayor sees it.

“I’m actually leveling the playing field so it doesn’t tilt in favor of those who cheat,” Emanuel said.

“The taxpayers are owed hundreds of millions of dollars [from] people not paying their fines or their fees. . . . Those that aren’t playing by the rules are cheating everybody else.”

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