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Public Shame As Public Policy
In a nineties version of the stockade in the village square, states are turning to what some officials are calling "cybershame," luring citizens and corporations to do right with the threat of online public humiliation.
Last week, Illinois became the latest state to post its list of delinquent taxpayers online, just in time for the April 15 income tax deadline, and already officials are touting its success.
The Illinois Department of Revenue tested a pilot program last November, sending notices to 500 delinquent taxpayers advising them they qualified for publication on the list, said spokesman Mike Klemens. From that, state officials collected $112,213 from 19 taxpayers.
"So we can't say we can't collect money off of it. It's a tool, so we've decided to go on and try it," Klemens said.
The delinquent disclosure list measure, House Bill 2671, was sponsored by Rep. Carolyn Krause, R-Mount Prospect, and Sen. William Peterson, R-Prairie View, and became effective Jan. 1. Under the law, individual or business taxpayers who have owed the state at least $10,000 for six months receive a certified letter notifying them of their status. Once that letter has been received, the individual or business name goes up on the list. Last week alone, the department mailed 5,200 notification letters.
Some 70 percent of the list is made up of defunct businesses, with building contractors and construction companies the most commonly listed, Klemens said. "They go belly up, make a bad bid," he said.
But there are also wealthy individuals who think they can evade the system, another reason for the list's effectiveness. Last November's mass mailing produced a response from a self-employed stockbroker who owed Illinois $35,000. He was reportedly concerned potential clients would see his name on the roster of delinquents, Klemens said.
Other businesses have used the lists as marketing tools, reports Ellen Schneider, a spokeswoman for the Connecticut Department of Revenue Services. The Constitution State has updated its list monthly since 1997, naming the top 100 tax debtors of record. Some businesses comb through looking for competitors, then advertising that "someone who will cheat the state will cheat you." But the list is simply a collection tool, Schneider said. A 1977 law allowed the publishing of all delinquents, but after taking out multi-page ads in newspapers and publishing five hardcopy books a year, the department found those practices cost-prohibitive. Now, the tax collectors go through an exhaustive process to make sure all avenues have been undertaken before notifying individuals and posting their names online.
"What we found was the Internet was an opportunity to put these people out for others to see, and what we found was that the public thought it was a wonderful idea," Schneider said, adding the department's Web site has received over 250,000 hits since it was first launched in Dec. 1996. "This in itself has proven to be one of the best tools for us to tell people we're serious about collecting taxes and telling people we're in the court of the honest taxpayer, and we're going after people who don't pay."
So far, the state has collected $52 million as a direct result of the names being posted, Schneider said, with an 80 percent turnover rate on the site from month to month.
The results are equally as promising in Montana, which has been publishing its delinquents online for nine months.
"Once we announced our policy, that created a flurry of activity to avoid being published," said Jeff Miller, Montana's Department of Revenue's head of policy and performance management.
The state looks at the debtors each month and posts the top 50 each month only after an administrative lien has been placed against their property. At that point, the matter becomes public record and the tax collectors list their names. Over $286,000 had been collected as of May 1998, with the page getting around 500 views each month. Miller said the threats of public humiliation have forced many debtors to come back to the table to set up closure agreements and payment plans.
Coming to the policy wasn't an easy decision for any of the states. Illinois lawmakers were enthusiastic after seeing the effectiveness of Connecticut's program. But workers in the department of revenue were wary.
"This wasn't something we went out and looked for and we didn't say 'hooray, goodie, now we can beat them,'" Klemens said.
However, after witnessing its success, it was hard to turn away from an effective tool. And all administrators said they realize the importance of being accurate and making sure the list is used as a last resort. Schneider noted that not one person has come forward to claim they should not be on the list.
"We don't ambush anybody," Schneider said. "The important thing is that we try to be fair. But if they're not going to be fair with the state of Connecticut, we feel like we're in good shape."
Mayor To Miss E-commerce Convocation
When the members of the controversial Advisory Commission on Electronic Commerce convene in June in historic Williamsburg, VA, they'll most likely deal with the protests of local and state governments who claim the group is unfairly biased towards business interests. But their strongest ally on the board won't even be there to speak for them.
Dallas, Texas, Mayor Ron Kirk has said he won't attend the meeting because he has other commitments that weekend. His absence isn't out of protest, says his press secretary Justin Lonon, even though he is an active member of the U.S. Conference of Mayors. The Mayors have joined with the National Association of Counties to sue the commission and its business representatives, claiming the make-up of the group is unlawful because there are not enough representatives of state and local governments.
"I think that's great," said Larry Naanke, NACo's executive director, when told of Kirk's plans. "He shouldn't attend. It's not a legally constituted commission. We hope some other members won't attend."
Naanke is in discussions with lawyers and U.S. Mayors to decide whether to petition the court for an injunction prohibiting the meeting from taking place. And if that doesn't work, he said, they may ask for the findings to be rendered invalid because the commission is illegally constituted.
Katie Cullen, a spokeswoman for U.S. Mayors, said it doesn't matter if Kirk is there or not. If the industry representatives do attend, they will have enough to constitute a quorum.
"When it comes down to voting, they will win every time," Cullen said. "He may feel like 'why bother?' Local government is not going to be represented anyway."
Virginia Governor James Gilmore, R, the de-facto chair of the commission, insists he will listen to all sides of the debate, rendering Kirk's absence inconsequential. But his spokesman, Mark Miner, said he hadn't heard of Kirk's plans and called it "premature" to wonder whom will be there because the formal date has not been set. Lonon said the commission contacted his office with the proposed date range, which conflicted with a family obligation for Kirk.
—by Stephanie Lash
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