10% of businesses late paying city tax
The city of Grand Junction this month reported that 469 businesses are delinquent in paying the city’s 2.75 percent tax rate, and there’s an unusual amount of businesses — 222 of the 469 — being delinquent for more than nine months, officials said.
There are 4,349 active sales tax accounts in Grand Junction.
In an effort to recover those taxpayer dollars, the city has revamped its collections methods by going after the biggest, riskiest offenders or most high-profile businesses first, and devoting more city personnel to checking in more frequently with other delinquent business owners, said Jodi Romero, chief financial operations manager for Grand Junction.
“We are getting a very good response rate with those we’ve had to contact,” Romero said. “There are businesses that are in financial distress. I think it’s certainly a sign of the times. They’re struggling.”
It’s difficult for the city to estimate the amount of tax dollars it loses from delinquent business owners. Owners are required to file their earnings and the amount owed with the city, but the city doesn’t know how much a business has earned if it doesn’t report that information, Romero said.
The city doesn’t disclose which businesses are delinquent unless no resolution is made and the business is seized and its assets auctioned. Some businesses have been seized, but those businesses still have time to pay their sales tax commitments to the city. No businesses are slated for auction, Romero said. The kinds of businesses that are delinquent run the gamut, from small companies that may not have a storefront to corporations.
In an attempt to touch base with business owners before they fall into financial hard times, city employees now make contact with any business that is more than six months delinquent. Other businesses may be contacted as early as three months of being delinquent, particularly if it appears they may be going under.
Having to seize businesses and sell assets to recover taxpayer dollars is hardly the most ideal situation for the city.
A case in point recently revolved around a medical marijuana dispensary that was behind on turning over its sales tax revenue. If the case continued to the point of seizure, the city would have to maintain the store’s products, keeping marijuana plants alive — a tricky situation for the city to be in, as marijuana is an illegal substance under federal law. After working with the city, the store was able to pay back its owed taxes, officials said.
Romero said city officials generally try to advise new business owners to keep the city sales tax collections in a separate account so it’s not confused with revenues. Businesses that file their city sales taxes on time get to keep 3.33 percent of the taxes collected, Romero said.
Overall, she said, business owners take seriously the responsibility of passing along sales tax revenues in a timely way. Fines are levied for late payments and for repeat offenders.
“Really our intention is helping those businesses comply with the law,” Romero said. We do almost everything we can to avoid getting into that seizure situation.”