September 20, 2024
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Maine delegation irate over $35B in uncollected fines

AUGUSTA – The federal government has an estimated $35 billion in uncollected fines assessed by a wide range of federal agencies that go back several years and Maine’s congressional delegation wants efforts made to collect what is owed.

“This is clearly unacceptable,” U.S. Sen. Olympia Snowe said. “The taxpayers are paying more because people are not paying the fines and penalties that they owe.”

Snowe said $35 billion could go “a long way” toward paying down the federal budget deficit and federal agencies need to give collection of fines a higher priority.

The U.S. Justice Department estimates that $35 billion in fines, penalties and restitution has been assessed by various federal agencies – not counting the Internal Revenue Service – in both criminal and civil cases.

The Associated Press reported earlier this month that the amount of unpaid federal fines has risen almost fivefold in the last decade.

“Individuals and corporations regularly avoid large, highly publicized penalties for wrongdoing – sometimes through negotiations, sometimes because companies go bankrupt, sometimes due to officials’ failure to keep close track of who owes what under a decentralized system,” the AP reported.

Cited as examples of penalties left uncollected were:

. A gas pipeline company was fined $3 million by the U.S. Transportation Department after a gasoline spill and fiery explosion killed three young people in Washington State about seven years ago. At the time, the fine, which was the largest in the history of the federal pipeline safety program, was described in a department press release as a message that such tragedies “must never happen again.” But just last year, without any fanfare, the penalty was reduced to $250,000.

. Internal documents from U.S. Customs, released after the AP filed Freedom of Information Act requests, showed a more than $60 million “commercial fraud” assessment for one company. The case ended with a $15,000 collection by Customs.

. When coal mine firms’ violations were blamed for deaths, injuries and risks to miners from Alabama to West Virginia, the Mine Safety and Health Administration slapped them with more than $1.3 million in penalties. Records show many fines went unpaid. Some of the violators avoided paying by declaring bankruptcy or ceasing operations.

Rep. Tom Allen said it’s obvious that the federal government would never recoup all of the $35 billion in fines the Justice Department estimates has gone unpaid. But a substantial amount could still be recovered.

“Some of these criminal fines will never be collected,” Allen said. “The person is in prison and has no way to pay the fines. That does not mean we do not try to collect the fines, it’s just that the likelihood of collecting the fines is pretty low.”

In 2004 alone, federal authorities in various agencies assessed $7.8 billion in fines, penalties or restitution in nearly 100,000 criminal and civil cases. But less than half of that amount was collected.

One of the poorest records in collections is for fines and restitution assessed on white collar criminals prosecuted by the federal government. Only 7 percent of the restitution ordered in white collar crimes was paid in 2004.

“Clearly, we simply have to do a better job enforcing these fines in criminal matters,” Snowe said.

Another issue, Allen said, is that many of the agency fines are negotiated down from their original amount. If a $1 million fine can be negotiated down to $10,000, then it probably means the initial fine was out of line, he said.

“We should go after the uncollected fines, but we have to realize that some of the total here, the $35 billion, may be inflated,” he said.

U.S. Sen. Susan Collins, who chairs the Homeland Security and Government Operations Committee, said the problem of uncollected fines is “enormously frustrating” and has been plaguing the federal government for years.

“At a time when our budget is under tremendous constraints and we don’t have the money we would like to fund worthwhile education, health care and homeland security programs, it is beyond belief that there is literally billions of dollars owed the federal government that has never been collected,” she said.

Collins said her committee needs to take a closer look at the various issues surrounding collection of the unpaid fines and assessments. She said recent hearings have focused on waste, fraud and abuse in federal emergency aid programs and found that there were “staggering” misuses of federal funds.

U.S. Rep. Mike Michaud said Congress could learn from provisions the Maine Legislature has approved to go after unpaid fees and fines that allow the state to seize income tax refunds to meet obligations.

“If an individual or business in Maine does not pay a fine, they can be hit by the income tax offset,” he said. “I think Congress needs to look at that approach.”

Michaud has asked his staff to look into writing possible federal legislation that would mirror what the state has done to collect fees and fines.

“I agree we are never going to collect everything that is owed,” he said. “Some will be uncollectible. But I think we can do better than $35 billion out there in uncollected fines and penalties.”

Collins agreed and said the recently passed Senate version of the budget authorization act would provide for additional collection staff for federal agencies. She said it is important Congress actually appropriate the funds for further collection efforts in the budget this fall.

Snowe said Congress had to require the Internal Revenue Service to improve its collection process for taxes, penalties and interest. Unlike many of the other federal agencies, the IRS has strong enforcement mechanisms in place for collecting fines and penalties, including the ability to seize bank accounts. Still, Snowe said, there were billions in taxes that were due from both large corporations and individuals going uncollected.

“We had to go through that process to urge greater efforts and we are still going through that process,” she said. “Clearly, we need to make that sort of effort with these [other] uncollected fines.”


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