SCARBOROUGH – Town officials are looking for more effective ways to collect $86,000 in unpaid taxes from businesses in Scarborough.

Before its finance committee figures how to collect those personal property taxes, assessed on businesses’ property, the Town Council will consider writing off more than $27,000 in unpaid taxes from companies that have closed or left Scarborough since 2006.

Those uncollected bills, from 58 businesses, range from the $10.90 owed by Swinburne Auto Refinishing to the $5,587 owed by Damon and Malone Construction and Paving Co.

“There is no way we can ever expect to recover those unpaid taxes,” said Town Manager Tom Hall.

Councilors are expected to vote Wednesday night on the write-off, which was recommended by the town’s staff.

Next Tuesday, the finance committee will begin discussing ways to prevent it from happening again.

Hall said options may include taking businesses to court or creating an annual business license that could be withheld until taxes are up to date.

“Beyond that, I’m at a bit of a loss,” he said. “It’s a very difficult area of taxation to administer.”

Scarborough isn’t alone in having difficulty collecting personal property taxes.

Geoff Herman, director of state and federal relations for the Maine Municipal Association, said it is “considerably” more difficult for towns to collect personal property taxes than real estate taxes.

When real estate taxes are overdue, cities and towns can put liens on property. The most common collection method for towns that accumulate unpaid personal property taxes is to hire an attorney and go to court, Herman said.

Some towns, especially smaller ones, may find that’s not worth the effort, he said.

“It is very difficult to enforce,” Herman said of the personal property tax, which has been assessed since Maine became a state in 1820. “The Legislature has never provided an enforcement mechanism to collect these types of taxes.”

Some towns use lists of unpaid tax bills in annual reports to put pressure on business owners, Herman said. Scarborough lists uncollected real estate and personal property taxes in its annual report.

Scarborough Assessor Paul Lesperance said the town relies on businesses each year to report what equipment they own and how much they paid for it. That equipment could range from computers and shelving to highly specialized pieces of equipment worth millions of dollars.

If owners don’t respond, Lesperance may visit the businesses to try to assess their personal property or estimate amounts high enough to make them respond, he said. “Legally, if they don’t return (the annual request), we can assess it at whatever we want,” Lesperance said.

Last year in Scarborough, the total value of business’ personal property was assessed at more than $116 million and the town had a collection rate of 98 percent. The town ended the year with more than $86,000 in unpaid taxes that Hall believes could still be collected.

That list shows amounts ranging from $10 to more than $36,000. Town officials believe the taxes can be collected because the businesses are believed to be operating.

The businesses that owe the most include Stearns Property Service of Gorham Road, which has an unpaid personal property tax balance of $12,269.17, dating back to 1997.

Tax Collector Wendy Frazier said the company is not making payments, unlike some other companies that owe large amounts.

Company owner B.D. Stearns could not be reached for comment, and the company’s telephone number is no longer in service.

Maine Earthmoving Inc. of Runway Road owes the town $36,802.56, which it is paying in installments arranged through bankruptcy proceedings, Frazier said.

She expects Maietta Construction Inc., which filed for bankruptcy and owes the town $19,609.19, to start making payments soon.

Another company, Direct Mail of Maine, is making payments on its balance of $17,517.27.

 

Staff Writer Gillian Graham can be contacted at 791-6315 or at:

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