By Mike Dunn

PHILADELPHIA (CBS) – With the School District still in dire financial straits, the city’s Revenue Commissioner says her department’s effort to collect a little-known tax that benefits the schools is paying off.

It was last October that City Council members asked Revenue Commissioner Clarena Tolson why the city did such a poor job collecting the “School Income Tax.”  That’s a little-known tax on investment income.

Tolson, at the time, promised to better publicize the tax and to ramp up collections.

Now — with the fiscal year complete — she proclaims some success, with collections up more than 20-percent:

“School Income tax collections for this year were approximately $37 million.  In past years, it was $30 million.  More people know, and more people are paying.”

But Tolson admits that many residents who may owe the school income tax — and even some tax preparers — still are unaware of it.

The outreach has included seminars on the tax for more than one thousand preparers, and form letters sent to six thousand taxpayers who the city believed were likely to owe.  Some of those recipients were upset that those letters were sent by a collection agency, not the city itself.  Tolson makes no apologies:

“The pilot project that we had with the collection agency is an effort to get that information out further and faster.  But collecting that funds for the city schools is a major priority.”

Tolson says the city has no clear idea how much would come to the district with 100-percent compliance on the school income tax.  But she says the department is working with state and federal officials to get a better sense, since investment income also must be reported at those levels:

“Part of our exploratory process, part of our collaboration with the state and the IRS, will give us more information with regard to that potential.  So our efforts right now are to further educate and further develop the relationship with the other two authorities, to understand more about its potential payment from our citizens.”

And with the School District still in dire financial straits, the Revenue Commissioner says her department’s outreach on this tax will continue:

“We are encouraged that our recent efforts to improve compliance with the school income tax has led people to greater awareness, and this has resulted in the $7 million in new revenues.”

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