By Cindy Schroeder
The Cincinnati Enquirer

COVINGTON - When Lexington Fayette Urban County Government tried one of the nation's first tax amnesty programs last fall, supporters hoped to generate $400,000.

Instead, the central Kentucky government collected $2.6 million during the 10-week program - most of that within the campaign's last five days. About 1,250 new accounts also were added to the area's tax rolls.

"Needless to say, we were very pleased,'' said Bill O'Mara, director of the division of revenue for Lexington Fayette County Urban Government. "Going in, we had no idea what to expect. When we looked across the country, only about six cities had ever done a tax amnesty program, and four of those were in the midst of their campaign when we decided to do ours.''

This spring, Covington officials hope to reap the benefits of a similar campaign.

Using Lexington-Fayette County's "pay less now or pay more later approach,'' Covington City Commission gave the go-ahead Tuesday to an eight-week tax amnesty campaign using the same marketing and advertising firm that Lexington used - CJ Advertising in Lexington. It hopes an educational campaign relying on everything from ads on public buses to radio spots will persuade delinquent businesses to pay past-due business taxes to avoid penalties and interest.

"We want to generate much-needed revenue during this current economic environment,'' said Covington finance director Bob Due. "And we also want to give assurances to taxpayers that we're trying to make sure everybody pays their fair share."

How much in uncollected business taxes the city is missing is anyone's guess, Due said. He said there are at least a thousand accounts that owe money to the city, and probably more that the city isn't aware of.

Those accounts could be businesses that haven't paid payroll or net profits taxes, or individuals who have done business in the city, such as real estate agents, taxi drivers and subcontractors, who have not paid taxes on their earnings.

Due wouldn't give an estimate of how much money he thought the program could bring in, but he agreed to do an analysis and try to produce an estimate for elected officials.

For a contract price of $108,465 for the marketing campaign, Covington officials hope to reach everyone doing business in the city who's avoided paying occupational license fees on wages and net profits - whether by design or through ignorance. Workers who have slipped through business tax loopholes in the past have included everyone from lawyers to real-estate agents to taxi drivers and subcontractors, city commissioners said.

As a follow-up, Covington officials want to use some of the proceeds from the program to add three positions that will be dedicated to collecting delinquent taxes on an ongoing basis. One of those will be an attorney whose sole focus will be taking delinquent taxpayers to court.

"If you don't take care of your (delinquent taxes) during the amnesty period, then you'll be taking care of them in court,'' said City Solicitor Jay Fossett.

The tax amnesty campaign comes on the heels of Covington's recent lawsuit against radio giant Clear Channel, alleging it hasn't paid net profits taxes since buying Jacor Communications six years ago. Since the suit was filed, Due said, the multibillion-dollar company has assured the city that the problem will be addressed "in the near future.''

E-mail cschroeder@enquirer.com