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Little-Known City Tax May Become Latest Battleground Between City Council And Nutter Administration.

By Mike Dunn

PHILADELPHIA (CBS) — A city councilman says Mayor Michael Nutter’s efforts to crack down on residents who’ve been ignoring a little-known city tax have gone too far — so he now proposes an amnesty on interest and penalties.

The so-called “School Tax” applies to income from dividends, short-term capital gains and other unearned income outside of a retirement accounts. Revenue Commissioner Clarena Tolson has said that the tax often goes unpaid, due to ignorance or deception. But Councilman Jim Kenney says the Administration’s efforts to crack down on this have gone overboard.

“They’re whopping people with bills, with exorbitant interest and penalties, that I don’t think they should have to pay,” Kenney says. “The city not only wants to bring that tax liability to their attention now, they want to add on interest and penalty for a number that they never even tried to collect the tax.”

Kenney proposes an amnesty on the school tax for 2014, with interest and penalties waived.

“I think within that year people would step up and pay the principle,” he says. “If the interest and penalty are waived, I think there’s a better chance the school district would get more money, a cash infusion faster than otherwise.”

A spokesman for the mayor says the Administration will only comment when Kenney’s plan is debated in council committee.

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