By Mike Rutledge
Post staff reporter

As Covington prepares to launch a tax amnesty program April 19, the city already can claim a tax victory of $196,000 over media giant Clear Channel.

Within weeks after Covington sued the company March 11 in Kenton Circuit Court, seeking net profit taxes the city said had not been paid since 1999, Clear Channel mailed a payment of $196,902.80. City Finance Director Bob Due said that amount represented:

•  $129,640 in back taxes.

•  $32,410 in penalties.

•  $34,852.80 in interest.

"It closes out the lawsuit," Due said.

City officials said the Clear Channel lawsuit was not part of the city's tax amnesty program, which will run from April 19 through June 11, allowing people to pay back payroll taxes or net profit taxes they owe to Covington.

The Clear Channel lawsuit should be a warning to other companies and individuals that may owe the 2.5 percent payroll taxes or net profit taxes to the city, officials said.

"We look at them (the lawsuit and tax amnesty) as two separate things, but it's nice to have that in the bank account," Due said of the payment.

Officials from Clear Channel, which maintains an office in Covington, did not say why the company had not made the tax payments, which ceased after Clear Channel bought Jacor Communications in 1999.

Clear Channel reported earnings of nearly $9 billion in 2003 and owns eight radio stations in Cincinnati, including WEBN-FM and television station WKRC, Channel 12. The company's local operations also include control of event booking for Riverbend, Bogart's and the Taft Theater. It also does some booking for the U.S. Bank Arena, the 20th Century and Top Cat's.

"There are a lot of businesses that have been here a long time and have always paid their taxes," said Mayor Butch Callery. "We're attempting now to bring into the fold those which have ignored that responsibility."

Covington hopes its tax amnesty program -- based on one in Lexington that reaped more than $2 million last year -- will boost revenues. Payroll taxes and net profit taxes, which together account for about 56 percent of the city's general fund, have flattened in recent months after healthy growth during the 1990s and earlier this decade.

Those who participate in the amnesty can avoid paying all penalties and interest on the back taxes, and also can avoid prosecution.

Those who already owe penalties and interest, or who have tax complaints against them, are not eligible.

"What happened with Clear Channel is a good prelude to enforcement because we're going to make every effort to contact the taxpayer and have them voluntarily comply, but if we can't we're going to use whatever methods we have available to us to ensure compliance," Due said.

When the amnesty program starts, the city will have a special Web site that will answer questions about whether taxes are owed, and how much.

Three auditors also will answer questions by phone.

The city plans to better educate the region's CPAs and payroll services about who should be paying the taxes, Due said, because, "They might not be aware, their clients might not be aware."

Once the program is over, the city plans to spend more time using computer databases -- such as information from the Kentucky Revenue Cabinet -- to find those who should be paying.

The city also will pay closer attention to such sources as listings of homes that have sold and the real estate agents who made money from the transactions.

"I think what we're going to do is just be more vigilant," Due said.

"And as we go through these efforts and we're not getting any response, we're going to go to the Legal Department."