Banks and Corporations Owe Detroit over $12 Million in Taxes, City gives Ultimatum for Payment or Face Court Action

Michigan’s capital, Detroit has issued an ultimatum to banks and many corporations operating in the city who have failed to settle their tax obligations, to do so now or face court action.

According to city officials, these banks and corporations owe the city over $12 million in unpaid property taxes. The city stated clearly that if by September 1, 2016 these banks and companies have failed to settle matters, it will take the matter directly to the courts for filing of over 600 lawsuits against the defaulters.

On July 18, 2016 Detroit was forced to file for Chapter 9 bankruptcy. It was, and still is the largest municipal bankruptcy filing in United States history by debt; estimated about $18–20 billion. The debt filing made Detroit the largest city by population to file for Chapter 9 bankruptcy. During the period, some people abandoned the city. Pensions, jobs and other basic services were badly affected. Many residents protested against the federal government, accusing it of being behind the crisis.

However, the city seems to be on the recovery path. Within the last two years, it managed to pay off around $7 billion of its debt and obligations, however the city still needs more money. Adding to the problem are the banks and corporations’ reluctance to settle their tax obligations, making the poor in the city carry the greater tax burden. This compelled the city to take all available legal means to force these cabals, who are good at evading tax, to settle their obligations.

According to the details, the city is seeking to recover approximately $20,000 from each bank or company, and around $8,000 per parcel for 1,543 lots, both residential and commercial. City officials revealed the banks and companies have failed to pay their property taxes for a two-year period, from 2010-2012.

Officials refused to publicly name the banks and the companies, but stated that if they failed to pay peacefully by the September 1 deadline, they will be exposed and dragged to the law courts for forced payment.

In a statement issued by city Treasurer and Deputy Chief Financial Officer, David Szymanski on August 17, 2016 he stated that city officials have waited for several months for the companies to settle their obligations so that basic service delivery in the city could improve, but they blatantly refused to accommodate the request.

“For too long, there are those who chose not to pay what they owed in taxes, leaving everyone else to pay the price. We are working to improve city services for our residents, and to do that, whether its better police and fire protection, streetlights or better schools for our children, we need everyone who does business in this city to pay their fair share,” he wrote in the statement.

Mr Szymanski further stated that city authorities are confident that the monies will be retrieved from the banks and companies owing. “The amount (owed) is certainly not a surprise. The evaluation of the viability of such a lawsuit is what caused pause in the past. We’re confident that we’ll be successful in relation to collection of these taxes in most of the cases.”

The city further revealed its plans to go after delinquent taxes for other years, as well. Tax experts say this means that those who had properties in the city at a tax auction, could still be asked to settle their tax obligations. It is said this is permitted under Michigan law.

However, city officials explained that they would not take the opportunity to target individuals who own fewer than three properties, which are not linked to a limited liability corporation or company.

“We are not talking about the family that has fallen on tough times, those struggling to decide whether to feed their children or pay their taxes. We went to great lengths to ensure that we were going after only those who bought property as investments, not as a place to live,” Szymanski clarified.

In early 2016, the city’s Mayor, Mike Duggan reportedly proposed a $2.6 billion fiscal 2017 budget, with hopes for the city to be released from post-bankruptcy state oversight by January, 2018.

Mayor Duggan’s spokesman, Dan Austin told the Detroit Free Press in an interview that authorities are hopeful the banks and companies owing, will not wait for a court notice to be served before settling their tax obligations.

“We’re giving people a heads up that they still owe property taxes and we’re asking them to pay what they owe, and hopefully we don’t have to take it any further than that. $12.2 million can pay for a lot of cops and firefighters. It’s not an insignificant amount of money,” he said.

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