Facing a $271 Million Budget Shortfall and $1 Billion in Back Taxes

by | April 13, 2015

By Jim Morrill

As they scramble to balance the state budget, N.C. lawmakers could use a little help from Koren Robinson.

Robinson, who starred at N.C. State and later in the National Football League, owes the state nearly a half-million dollars in back taxes.

He's near the top of a long list of tax delinquents who collectively owe more than $1 billion.

That's in a state facing an estimated $271 million shortfall in a budget of $21.5 billion.

"A billion dollars would make a huge difference," said Rep. Bill Brawley of Matthews, a Republican who co-chairs the House Finance Committee.

Altogether, 312,353 people are on the list of state delinquents. That's more than the population of Greensboro.

"Taxpayer noncompliance is a reality that our state faces on an annual basis," said Revenue Secretary Lyons Gray, who promises more aggressive collection efforts.

Collecting the money isn't easy.

Of the billion dollars, revenue officials say active collection efforts such as wage garnishments or tax liens are underway on about $570 million.

Another $300 million is owed by people where collection attempts have failed or the person has declared bankruptcy. Officials are exploring new ways to collect the rest.

Hard to collect

Efforts by the Observer to contact delinquents reflect the challenges.

Eileen Effinger of southeast Charlotte owes $104,742, according to the Revenue Department. Martin Grimaldo of east Charlotte owes $53,000. Published numbers for each were disconnected.

Frederick Engle of Matthews is on the list for owing $102,500. Until this month, he was serving time in federal prison for tax evasion.

And then there's Robinson, a Belmont native and South Point High School standout who starred at N.C. State about 15 years ago.

Originally signed by the Seattle Seahawks, he was a one-time Pro Bowl player who played for three teams. At one point he signed a $12.7 million contract with the Minnesota Vikings.

In January last year, he tried to file for bankruptcy in Raleigh. The case was dismissed when he failed to submit required paperwork. Records show he tried to file again last fall in New Jersey, representing himself. That case was also dismissed when he failed to file the right paperwork.

Reached by phone, Robinson said the debt has been resolved. "It came from my signing bonus back in the day," he said, "but that has been taken care of."

Revenue officials say they stand by their list.

Trying new tricks

Cal Johnson, director of the Revenue Department's collections division, said his staff is expanding its use of electronic locator services and using other technology to collect money. They're also trying new tricks.

They've begun working with the Alcoholic Beverage Control Commission, for example, to make ABC permits for restaurants and bars contingent on tax compliance. Officials say noncompliance is high among such businesses.

Outsiders give the department high marks for effort.

"In the legal community, the Department of Revenue is (considered) a vigorous collector," said Travis Sasser, a bankruptcy lawyer in Cary. "They're diligent, and there are real consequences brought to bear when people don't pay their taxes."

In Mecklenburg County, individual taxpayers and businesses owed the county more than $26.8 million.

State tax delinquencies have remained at the billion-dollar mark since 2011. Two years earlier, they were half that.

A billion dollars could go far:

--It's more than twice the current appropriation for general government, including the governor, the legislature and the Revenue Department.

--It's also more than twice the budget of the court system.

--It's what lawmakers appropriated for the state's community college system.

--It's roughly the amount of money Gov. Pat McCrory is seeking for transportation bonds.

Senate budget co-chair Kathy Harrington, a Gaston County Republican, called the delinquencies "alarming." Researcher Maria David contributed.

(c)2015 The Charlotte Observer (Charlotte, N.C.)