Unpaid tax exceeds the state's budget shortfall

Staff writerJuly 12, 2010 

This year, Bob Hupman has plenty of company.

The former Mebane town councilman owes the state of North Carolina $2.2 million in unpaid taxes. He tops a list of tax delinquents who owe the state $841 million - a 67 percent jump from a year ago.

The delinquencies exceed the $800 million shortfall N.C. lawmakers faced in passing the state's new $18.9 billion budget last month.

"I didn't realize it was that high," says Rep. Paul Luebke, a Durham Democrat who chairs the House Finance Committee. "It's definitely money that we could use."

The General Assembly's new budget slashed money and jobs across state government. More cuts could come in a few months if Congress doesn't deliver $519 million in federal Medicaid money.

"State policymakers are having to make very difficult decisions right now about how to pay for very important and basic public services," says Elaine Mejia, project director of the N.C. Budget & Tax Center. "We're also asking taxpayers ... to continue to support these services when a large portion ... should be paid for by these folks that are delinquent."

In Mecklenburg County, tax delinquencies this year are actually down. County tax officials say they have $18.6 million in uncollected taxes, compared to $20.2 million in the last fiscal year.

The bad economy

State revenue officials say the increase is due less to the sagging economy than the better ways they have of identifying delinquents. Others aren't so sure.

"When the economy is bad, people don't pay their taxes," says Rep. Pryor Gibson, an Anson County Democrat who co-chairs the House finance committee. "We need it worse, and they've got less."

Revenue spokeswoman Beth Stevenson says the department is trying to collect the money.

It hopes to recover $221 million by garnishing paychecks. And it has entered into payment agreements for an additional $133 million.

Delinquents owed the state $505 million in March 2009. Stevenson says the department has better tools now to identify nonfilers.

But because in part of budget cuts, the department has 17 vacancies in its collections division. That represents 7 percent of the collections staff.

"We in the General Assembly have tried to be supportive of efforts by the [department] to collect these delinquent dollars," Luebke says, "and if the department is not more successful at reducing delinquencies, we may need to look at that in the Revenue Laws Study Commission."

More than a half-million individual and corporate taxpayers owe money.

Hundreds are posted on the revenue department's website. They include at least 28 individuals and six companies, each owing more than $100,000.

Uncollectible?

Continuing to top the list is Hupman.

Two weeks after the Observer reported his $2.2 million tax debt in 2009, Hupman resigned from the Mebane town council. Other media followed with reports that he also owed millions to the federal government.

An Internal Revenue Service lien shows that he owes more than $6.4 million that was due last week. The Burlington Times News reported in January that IRS agents seized his property in Mebane.

Hupman, former president of MebTel Communications, could not be reached. A woman who answered the phone at his office said "We have no comments," even before a reporter could explain what the call was about.

Former N.C. State University and NFL football player Koren Robinson owes $497,502. He could not be reached. Neither could Larry McAlpine of Charlotte, who owes $200,729.

Evelyn Robinson of Fayetteville is listed as owing $190,508 in sales and use taxes. When a reporter called, she said, "It's already been taken care of" and hung up.

Stevenson says the revenue department still lists the taxes as unpaid. Beyond that, she says she can't comment on what the department is doing to recoup money in specific cases.

The Observer tried to reach each of the 10 biggest delinquents. Many were unreachable. Some numbers were not listed, and some companies apparently were out of business.

That's part of the problem.

Stevenson says revenue officials have determined that $112 million of the $841 million is simply uncollectible.

Staff writer Ben Niolet and researchers Maria David and Marion Paynter contributed to this report.

jmorrill@charlotteobserver.com or 704-358-5059

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