Council approves garnishment of state refunds in North Smithfield to pay past due tax bills

NORTH SMITHFIELD – Residents who owe back taxes to the town of North Smithfield will get the money taken out of their state refund check next year following an initiative passed unanimously this week by members of the Town Council.

Councilors approved a Memorandum of Understanding between the town and the Rhode Island Division of Taxation that will see tax refunds garnished to pay those overdue bills.

The effort was passed at the urging of Finance Director Cynthia DeJesus, who noted that the city of Central Falls used the service when she was employed there.

“When they file their taxes if they have any refund – just for state, not federal – it will be garnished just like child support gets garnished, just like if you have a lawsuit it gets garnished from your refund,” DeJesus said. “It worked very, very well in Central Falls.”

According to DeJesus, those with past due bills will get a notice in November of the town’s intent to intercept the refund if the debt is not paid by December 31. Once the deadline passes, North Smithfield will send a list of debtors to the state tax division, which will flag any potential refunds, then put the garnished money directly in town’s bank account.

“You wouldn’t believe how many people come in before December 31 to make that payment,” DeJesus said, comparing the tool to the threat of tax sale used to collect on other property bills. DeJesus noted that the town had more than 20 town properties slated for tax sale earlier this year, but only six were ultimately put up at auction. “Why? Because they received a letter letting them know that it was going to go to tax sale.”

The free garnishment service is offered to all municipalities that sign an agreement with the state, and applies primarily to motor vehicle taxes. DeJesus noted that the change won’t apply to this year’s state refunds as the deadline has already passed.

“It’s just permission for us to use those services,” she said. “We can still go forward and anybody that files late, we can still tag them, or we can wait and start it in November. We have everything ready to go.”

Council Vice President Kimberly Alves said that she’s been discussing the effort with DeJesus for awhile.

“I’m glad to see it’s finally here,” Alves said at the council meeting Monday, April 4.

DeJesus estimated the change could bring in some $600,000 to $700,000 in back taxes as there is no statute of limitations on the bills, and that it will save the town on fees paid to a collection agency. She noted that the garnishment will only apply to delinquent taxes.

“We’re not going to garnish your refund because you haven’t paid your 2021 bill,” she said. “We’re talking about old ones.”

The finance director noted that the money will be put into the town’s account on a weekly basis after a roughly 30 day turnaround, and that she expects North Smithfield to see a decent windfall.

“People that move to other towns – they find them because they don’t miss out on getting their refunds,” DeJesus said of debtors. “We just need to do something.”

The issue passed with a 4-0 vote, with Town Council President John Beauregard in absent on Monday.

“I can’t believe we haven’t done it sooner,” DeJesus said.