Rhode Island Goes After Nonresidents That Owe Taxes

The state of Rhode Island’s division of taxation has started to receive payments on delinquent taxes from nonresidents as a result of a pilot outsourcing program, according to Michael Canole, chief revenue agent, income tax assessment.

In late 2007, the state hired Rossi Law Offices Ltd., a firm based in Smithfield, R.I., to make the collections because the government agency doesn’t have any out-of-state operations, Canole said. The state’s taxation department handles all collections for accounts of in-state residents.

The six-month pilot program could be extended if it proves successful. Early results have been positive, Canole said, but he didn’t have any figures on the amount collected to date.

An estimated 1,800 nonresidents owe between $4 million and $5 million to Rhode Island. Of those accounts, the pilot program is targeting about 250 of the delinquent taxpayers that owe the most money, according to Canole.

Rossi will be paid on a commission basis for any delinquent taxes that it recovers. According to Canole, Rossi will earn 12 percent of the amount collected for non-litigated accounts; 23 percent of the amount collected for litigated accounts; and 40 percent of the amount collected for litigated accounts where the debtor resides outside of Massachusetts or Connecticut.

The compensation for collections for those in Massachusetts or Connecticut is less because Rossi has offices in those states, so overhead for litigation will be lower, Canole explained.