Paul Hammel
Nebraska Examiner
LINCOLN – A little-known state effort to shame delinquent taxpayers into paying up is still on the job 15 years after it was created.
But the state’s worst tax scofflaw in recent years, a former Omaha business owner, remains at the top of the state’s so-called “wall of shame” despite the listing, raising questions about the list’s effectiveness.
When it was created by the Nebraska Legislature in 2010, the state was struggling with a budget shortfall, and the public posting of tax scofflaws was billed as a low-cost way to force delinquencies to be paid.
There’s been little publicity about the wall of shame since, despite a similar budget crunch impacting the state this year.
As of March 31, nearly 370 individuals and companies from Nebraska and several other states were listed on the Nebraska Department of Revenue’s website as owing more than $20,000 in state taxes. In total, they add up to owing about $22.6 million.
Topping the list is former Omaha businessman Randall J. Thompson, who owes the state nearly $2.4 million in individual income taxes, according to the website.
That’s about the same amount that Thompson owed when the state’s worst tax scofflaws were first posted in 2010.
Does shame work?
Is shame still effective strategy for collecting delinquent taxes?
State Tax Commissioner James Kamm said the wall of shame “is one of the different tools” used by the Department of Revenue to collect delinquent taxes.
“The Department places the collection of delinquent taxes as a high priority,” Kamm said.
One former state tax commissioner, Tony Fulton, who served from 2016-2022, said the list worked for some people who wanted to avoid being publicly listed, but it didn’t work for others.
The state gives 30 days warning before listing an individual or company, giving someone time to pay up before being publicly revealed as owing taxes.
Fulton recalled that it did generate tips to the department.
“It definitely got people’s attention,” he said. “I used to get contacted … ‘Hey, I know this guy.’”
Still common to see lists
About 20 states utilize walls of shame — roughly the same number as in 2010 — according to the Federation of Tax Administrators, a national group of tax commissioners. Some states list only businesses that owe taxes, while most list both individuals and companies, according to Terri Steenblock the FTA’s tax and revenue administrator.
She said such shame walls have a two-fold purpose: to collect delinquent taxes, but also to inspire voluntary payments of taxes due.
A Nebraska Department of Revenue spokesman said that of the $9.8 billion in taxes paid to the state during the 2023-24 fiscal year, about $60 million in delinquent taxes was deemed eligible to be collected. That compares with $5 billion in total state taxes collected 10 years ago and about $26 million in tax delinquencies deemed collectible.
Patrick Roy, the department spokesman, said that some delinquencies cannot be collected, such as assets held in another state by an out-of-state taxpayer or when a deceased taxpayer has no assets.
Roy said collection of taxes due is assigned to a “dedicated team” within the compliance division of the Revenue Department that knows how to find and legally recover assets. He said the state uses a variety of other methods to collect delinquent taxes, such as tax liens and, as a last resort, selling off assets at auction.
The state does not collect delinquent property taxes. That is a local responsibility for a locally collected tax.
Roy, like Fulton, the former tax commissioner, said they could not comment on an individual taxpayers’ case, thus they could not respond to questions about why Thompson still remains atop the most-taxes-owed list.
Why collecting sometimes takes time
Back in 2010, Doug Ewald, who was then state tax commissioner, told the Omaha World-Herald that in general, if a taxpayer has no assets, there’s nothing for the state to recover.
That appears to be the reason Thompson, who would now be 75 or 76 years old, remains atop the delinquent tax roll. He faced a bevy of legal problems starting back in the 2000s.
Thompson owned a day-trading firm, R.J. Thompson Holdings, which he reportedly sold in 2001 for $13 million in cash, bonuses and incentive payments.
But in 2006, a federal tax judge ruled that Thompson had set up a sham tax shelter to avoid paying taxes on $21 million in capital gains from the sale.
In 2014, he was convicted in U.S. District Court of failing to pay federal income taxes he had withheld from employees’ paycheck at his company, American Medical Files. He was sentenced to six months in prison and three years of supervised release.
The money was used, according to court files, for mortgage payments on a luxury home in southwest Omaha and expenses at a Las Vegas casino, the Bellagio. He was ordered to pay $95,505 in restitution, and, as a condition of his supervised release, not to gamble.
No clarity on payments
A clerk with the U.S. District Court in Nebraska told the Examiner that she could not publicly reveal whether Thompson had paid any of the restitution ordered, which was supposed to be paid off in monthly installments of $250 a month or 7% of his gross income.
Thirteen years ago, the Internal Revenue Service forced a sale of Thompson’s possessions in five storage units in Sarpy County. The possessions, according to Omaha television station KETV, included football helmets signed by Gale Sayers, Dick Butkus, Bart Starr and Nebraska football stars, as well as boxing gloves signed by Floyd Patterson and Muhammad Ali.
Thompson’s attempts to overturn his convictions on appeal were unsuccessful, and his name last appears in court files in 2020, when Wells Fargo Bank won a revival of a default judgment against Thompson for nonpayment of $12.4 million to the bank. That court order indicated that Thompson, in 2020, still lived in Nebraska, but attempts to reach him via phone or through past attorneys were unsuccessful.
The Examiner was able to leave a voice message with the taxpayer who owes the second-most in delinquent taxes to Nebraska, Ahmer Khan of Frisco, Texas.
Khan owes $1.1 million in sales taxes, prepaid wireless taxes and waste reduction and recycling fees in Sarpy and Douglas Counties, according to the Department of Revenue.
Those messages were not returned by Friday afternoon.