Erie County officials recently wrote off $808,000 in personal property taxes that went uncollected for years.
Faced with $4.5 million indelinquent taxes owed the county, Erie County treasurer Jo Dee Fantozz targeted 103 delinquent accounts and canceled $808,000 in past-due taxes.
The first account to be written off -- the first in more than eight years, according to Fantozz -- was a nearly $200,000 delinquency from Island Express Boat Lines, Ltd., a limited liability company Erie County prosecutor Kevin Baxter and others formed in 1997.
On June 17, the county Board of Revisions and assistant county prosecutor Trevor Hayberger gaveFantozz final approval to write off more than $608,000 owed by the remaining 102 companies.
Island Express bought boats and used them to shuttle tourists across Lake Erie.
As a result of its business operations, Island Express accumulated $199,424 in delinquent personal property taxes, more than $78,000 of which was slated for Sandusky Schools.
Island Express' total delinquency consisted of at least $112,000 in unpaid taxes, with the remainder being penalties and interest. The last time the company was up to date on its personal property taxes was 1998, while the last payment it made to the county was $11,000 in 2003, Fantozz said.
Under state law, the county prosecutor and the Board of Revisions are the two parties who issue final approval for a treasurer's proposal to write off delinquent personal property taxes, which include taxes on machinery, furniture, inventory and other business equipment.
Because of Baxter's involvement with Island Express, the approval of the tax write-off was handled by the Geauga County prosecutor's office, Fantozz said. That process started at least four years ago and went though three special prosecutors.
"There's a lot of politics," said Bridey Matheney, an assistant prosecutor in Geauga County. "Even if there's a special prosecutor, this was a humongous public utility debt. ...We dotted all the i's and crossed all the t's."
In selecting Island Express as a write-off candidate, Fantozz said the company had no assets remaining and it had been dissolved. According to the dissolution certificate Baxter filed with the Ohio Secretary of State, Island Express was dissolved Dec. 31, 2007.
Investors in Island Express are not liable for the taxes as typically investors in a limited liability company are not liable for the company's debts.
"That's why people form (limited liability companies) in the first place," Matheney said. "The whole point of the LLC is to relieve the president or owners of liability."
While Baxter did not return a phone call seeking comment on the write-off of Island Express' tax debt, the attorney for the defunct company, Thomas Lucas, replied in an e-mail that the company had 21 investors who invested "millions of dollars" over a period of seven years. He wrote that the company failed in 2003, and that these "investors, as well as creditors, lost a substantial amount of funds."
The next three largest write-offs were Firelands Kitchen ($100,244), Ames Merchandising Corp. ($66,573), and Birmingham Metal Products ($55,437), which all filed for dissolution in 2007.
According to local and state court documents, Firelands Kitchen went out of business in 2001, while Ames went out of business about a year after that. While it couldn't be officially confirmed, relatives of the former owners of Birmingham Metal Products said that company went out of business in 2001.
Fantozz said the remaining $3.7 million in delinquent taxes are from companies that are just plain delinquent. A majority of that amount is from companies that are disputing the actual worth of their personal property, a process that can take years.
State law requires that a tax delinquency must be at least five years old to be written off.
"I would assume a lot of those might be uncollectible in the future, but they haven't reached the five-year mark," Fantozz said.
Erie County has been in the process of purging its system of delinquent taxes for at least two years.
In an effort to make the state more business-friendly, Ohio has been gradually phasing out the tangible personal property tax since 2006. This is the first year personal property taxes won't be collected.
"It was a good time to get it cleaned up," Fantozz said of Erie County's delinquent taxes. "It's just been lingering for five, six or seven years."
Several county officials couldn't recall the last time the county wrote off delinquent taxes, but former county auditor Paul Strickfaden said it was 10 years ago when the county wrote off a few hundred thousand dollars in delinquent real estate taxes.