D.C. Man Delinquent $17.8M in Income Taxes

The taxman has come calling for a D.C. man.

The District government decided enough is enough and caught up with a man the city says owes more than $17 million in back taxes.

“In this day and age, it’s very hard to stay hidden,” said Stephen Cordi, of DC’s Office of Tax and Revenue. 

It started after the News 4 I-Team asked for a list of the top tax delinquents from the District and Maryland. Virginia said it does not keep a list of delinquent taxpayers, but as of June 2011, taxpayers and businesses owed $1.9 billion, according to the Virginia Department of Taxation.

Maryland and the District provided a list of their biggest offenders. In D.C., most on the list owe between $200,000 to more than $850,000.

“You don’t end up on this list until we’ve made a claim, you had an opportunity to contest it, the contest is over and we have sent you a series of notices,” Cordi said.

The people on the list either ignored those notices or lost all of their appeals, he said.

Cordi said he has about 40 investigators who track down debtors and can place liens on property, garnish wages and intercept other payments.

D.C. Councilman Jack Evans (D-Ward 2), who chairs D.C.’s Committee on Finance and Revenue, said the District has started to work closely with the Internal Revenue Service to find delinquents.

“Our tax rates are quite high,” Evans said. “Certainly much higher than in Virginia or Maryland and other jurisdictions.  I think a lot of people try to avoid them, and our job is to make sure they don’t.”

One business on the list blames a bad accountant for its $337,000 debt.

A couple from Southeast told News4 they can’t pay the $725,000 because of medical problems.

All could lose their homes if the city takes the rare step of seizing their property.

The pressure is on in D.C. to collect. The city loses any money it fails to collect within a 10-year statute of limitations.

“People are in financial trouble,” Cordi said. “They owe more on their home than its worth. Seizing it guarantees nothing. So we’re better off waiting until they decide to sell on their terms in a good market and we get paid at the settlement table.”

But less than a half hour after interviewing Cordi, the News 4 I-Team got a tip.

Police and tax investigators rolled up to a house on Military Road in Northwest and seized it from Barry Morewitz, D.C.’s No. 1 one tax cheater, according to the city.

Multiple neighbors, including Mark Parr, said Morewitz is a stock broker and former attorney for the Securities and Exchange Commission.

“I know one thing,” Parr said, “I pay my taxes, and I tell you what, everybody is hurting right now.”

The city said it recently discovered Morewitz hasn’t paid his taxes in at least five years and owes more than $17.8 million in taxes and penalties.

“17.8 million dollars is a lot of money,” says Evans.  “When you put it into perspective you could probably hire another 100 or 200 police officers."

The District government isn’t allowed by law to disclose how Morewitz managed to tally up a $17.8 million bill.

News4 made multiple attempts to get his side of the story in the days before he lost the house, but as he told the police, he doesn’t want to talk.