Wisconsin Owed -- But Doesn't Expect to Entirely Collect -- $1 Billion in Delinquent Taxes

This story running on Wisconsin’s HITNews.com site is a pretty lengthy read — but definitely worth your time if you haven’t run across it yet.

Wisconsin is in the position of being out close to $1 billion — with a b — in back taxes. It’s also in the position of probably never realizing that full amount:

“Instead, the state increasingly is cutting deals with deadbeat taxpayers as it tries to squeeze as much cash as it can from them,” the Gannett story claims. “Wisconsin tax officials made nearly twice as many deals in 2010 as they did just five years earlier and have forgiven more than $30 million in unpaid taxes since 2007.”

Wisconsin’s #1 debtor is a woman named Malini Ganeshapillai, former Department of Commerce who is now serving a 16-year sentence for allegedly embezzling millions of dollars between 2001 and 2005. She owes $2.6 million in back taxes.

Wisconsin has an arsenal of tactics it can use to attempt to collect these back taxes — tactics not generally available to third-party collection agencies:

• garnish wages up to 25 percent
• tap into bank accounts or other assets
• post names to the state’s “shame” website
• issue tax liens or holds on property in court
• intercept state and federal tax refunds
• intercept federal vendor payments
• schedule a hearing with revenue agents
• revoke a Wisconsin seller’s permit
• suspend or request non-renewal of professional state licenses

For out-of-state debtors, however, Wisconsin will often refer those accounts to an outside, third-party collection agency.

Since 2007, Wisconsin taxpayers paid private collection agencies $1.8 million to track down tax scofflaws, and those agencies managed to collect $8.5 million in debts.