SOUTH – Local businesses will not be audited this year and city officials will instead work on an education campaign to report personal property.
The city’s tax assessor, however, may request an audit or similar action next year.
While business owners are required to list equipment, machinery and other items related to their businesses, City Assessor Teresa Baboon said nearly 500 refused to do so or did not disclose what kind of property they owned. This forces her to make a better estimate of the value of their taxable assets.
Businesses are taxed on real estate and motor vehicles, in addition to smaller items such as computers, office equipment, and furniture.
Hiring an outside firm to audit local businesses could have generated about $2 million in new tax revenue, according to a company considered for the job.
But city council leaders were skeptical about auditing local businesses at a time when many were struggling to stay afloat.
Victoria Triano, the council chairwoman, said she was pleased with the plan Baboon presented Monday, which includes letters to business owners about what to declare on private property and information sessions. She expects business owners to properly declare their personal assets once they learn how to do it.
“I believe, I want to believe, that people who don’t know should know because they want to do the right thing,” Triano said. “I guess that’s going to be great.”
It only includes businesses that declare a business audit plan or are deemed to have more than $50,000 in personal assets.
Assemblyman Val DePaolo, a Democrat, said they did not spread the burden of the audit evenly.
“Is it really fair to go after all these medium and large companies? It’s not fair,” she said. “It’s a very difficult time for businesses.”
Paul Chaplinsky, a Republican and vice chairman of the City Council, said sending letters and information would increase tax revenue. This method avoids paying the audit firm and saves additional tax revenue for the city.
Baboon said she “reserves the right” to request a citywide audit if this year’s education efforts fall short.
“I will come back next year and tell you how the personal property register has improved. Hopefully, I’m going to see an increase, an improvement,” she said. If this is not the case, I would like the opportunity to further discuss how we can improve.
Baboon outlined her efforts to get businesses to submit the required paperwork at the last council meeting. For businesses that don’t file personal property statements, Baboon estimates the value of personal property and adds a 25 percent penalty.
“These people still don’t file because it’s cheaper not to file,” she says.