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Posted at 2:58 PM ET, 07/29/2010

Delinquent taxes paid to Virginia ... and to CGI

By Paige Winfield Cunningham

In Virginia's attempt to track down its debtors, the state could be losing out twice.

Individuals and businesses owe a collective $2 billion to Virginia. Many of them are just plain difficult to track down and bring to payment, judging from the fact that $1.4 billion of the debt is more than a year old and $764 million is more than five years old.

The Department of Taxation's solution for these stubborn holdouts? Outsource them to CGI and let the global company keep one-third of the taxes it manages to extract. So in fiscal 2009, CGI earned $11.5 million for collecting $37 million -- which, by the way, was 15 percent of the delinquent taxes it had been assigned to collect.

Even with this payment system, Virginia's still winning. But treasurers around the state say Virginia could keep even more tax dollars if it accepted the help they've been offering for years.

Unlike CGI, local treasurers have powers to issue bank and wage liens, seize property and send law enforcement to knock on doors. They already have resources on the ground to find debtors and force them to pay up. A state-run pilot in 2005 provided evidence that localities can do the job at least as well as contractors.

So why hasn't the state taken advantage of some readily available help? Scott Miller, treasurer for Hanover County, told me it's because state agencies assume a defensive mode anytime there's talk of changing methods. Transferring work from CGI to agencies like his would take some work, but he believes it could save Virginia money in the long run.

Paige Winfield Cunningham is an investigative reporter and managing editor at Old Dominion Watchdog. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Paige Winfield Cunningham  | July 29, 2010; 2:58 PM ET
Categories:  HotTopic, Local blog network, Virginia, economy, taxes  
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