CLEVELAND — If you lived or worked in Cleveland in 2021, you may receive an audit letter in the mail from the Central Collections Agency (CCA).
On Monday, I heard that residents were getting hit with an audit for 2022.
The audit letter, simply put, said the city had obtained federal income tax information from the Internal Revenue Service (IRS), indicating the person might have received income that may be subject to Cleveland's income tax.
Mara Sankin received an audit letter earlier this month.
"My accountant called me and was like, 'Yeah, it looks like you didn't do your taxes correctly in 2022,'" Sankin told me.
She also didn't file the form for 2023 and 2024, so she's working on doing so now— that way, an additional audit isn't sent her way.
The city tax form is a municipal income tax document. It asks for your employment, residence tax, and income information. It's also a standard form that is separate from your regular filings.
Sankin said she was told she owes $1,577 to the city of Cleveland now because she didn't fill out the city tax form.
"The penalties are a little wild, though. I mean, come on. It's like you're trying to squeeze blood from turnips," she said. "I'm annoyed. In this day and age, financially and in this economy, it just seems like, for at least me, I'm waiting for the next pounding. Like, it's just gonna happen."
Sankin has lived in Cleveland for a decade, but she said she had never heard of the city tax form before.
I asked a Cleveland Facebook group with 26,000 followers if they'd heard of the form or if they'd recently been audited.
Overwhelmingly, dozens of people said they didn't know about the form until now, and that they've just been sent an audit letter as well.
Some of those who responded to my social media question said they filed their taxes through a CPA, while others said they utilized an online service.
Since Monday, I've asked the city for an interview to address the form and why so many people are seemingly left in the dark until it's too late.
No interview was granted, but we did receive an email.
A Cleveland Finance Department spokesperson said 2022 audits are now coming to light due to delayed information from the IRS.
"That being said, the audit letters people may have received are more so general inquiries as it’s just the beginning of the collection process. It is not our intention to alarm anyone, as we may actually owe them money. The hope is these individuals will provide documentation and then we can determine if taxes are still owed or if we need to issue a return. Penalties can be disputed. Those are then reviewed and decided on a case-by-case basis. We always try to help people out when we can," a Cleveland Finance Department spokesperson said.
A penalty may be imposed on a municipal income tax return, other than an estimated income tax return, not timely filed, of $25 a month during which the return remains unfiled.
Additionally, the Ohio Revised Code also provides criminal penalties for failure to comply with the income tax ordinance of up to $1,000 or up to six months imprisonment for each offense.
Interest shall be imposed per year, on all unpaid income tax, unpaid estimated income tax and unpaid withholding tax
The finance department told me Cleveland residents are sent reminders to file their city income tax through their Cleveland Water bills.
I asked the city for a mock bill that would show the notification, but one couldn't be provided Thursday afternoon.
Residents who might live in a complex where utilities are lumped into their rent wouldn't receive such a bill, though.
Landlords should inform their tenants of important information they receive in the mail. It’s a collective responsibility and while we certainly are committing to doing better on our end, we hope that landlords and employers will also do the same.
There are limited scenarios where non-residents who work in Cleveland have to file as well.
"In these instances, employers are the ones withholding their employees’ taxes, so we would hope that those employers would notify their employees if they didn’t withhold their income taxes and that they need to file those separately," a finance department spokesperson said.
Sankin said she understands it's her responsibility to file the form and keep up-to-date on what's required of her during tax season, but finds it unfair that she wasn't notified prior to the audit.
"It just sucks because I would, of course, rather pay this broken up over the years themselves, not get slammed with it at one time," she said.
Sankin is going to attempt to have the penalties waived.
"The whole thing just felt very weird. It felt very weird and almost like they were like, 'Ha ha, I got you,' and then now they're coming after me," Sankin said. "They alert us about everything else for God's sakes."
The finance department said it does not garnish wages and, more broadly, it cannot do anything legally until there is a court judgment.
"We try to avoid [a court judgment] as we’d much rather prefer to work it out with each person based on each individual case," a city finance department spokesperson said.
The finance department acknowledges it can do better when it comes to informing the community of this tax responsibility and "will certainly commit to doing just that moving forward."
"We’ll utilize a more holistic communications strategy that will include, at minimum, social media posts and notifying the press to better increase awareness," a city spokesperson said.
The city said it will post social media alerts regarding the form before tax season starts.
More information regarding the filing process can be found on this page of the CCA site.
If individuals want to file a dispute, email IndividualTax@clevelandohio.gov.
If you've recently been audited by the CCA, please reach out to me at Kaylee.Olivas@WEWS.com.
We'll Follow Through.
