City discovers some local businesses may not be paying sales tax
Published 12:06am Wednesday, September 12, 2012NATCHEZ — An alarming discovery of a number of local businesses operating without a license — and therefore likely not paying sales taxes — has prompted the City of Natchez to start an effort to resolve the issue.
Mayor Butch Brown informed the Natchez Board of Aldermen at its Tuesday meeting that a whole cluster of people in town are operating without a “privilege” or business license.
Brown said he went through the city’s docket and found a number of businesses from which the city has purchased goods or services that did not have a license.
He said there is sure to be more businesses in the city that do not have licenses that the city simply has not worked with recently.
Doctors, lawyers and insurance companies, Brown said, will be the first categories of businesses on which the city will concentrate.
“We have a whole bunch of those type people, and they don’t know, but they don’t have a license,” he said during the aldermen’s finance meeting.
Brown said he also discovered through researching privilege licenses that Walgreens and Walmart had paid for their license but never received it.
The city clerk’s office is charged with issuing privilege licenses. The person who handled them in the past no longer works with the city.
Brown said he talked to Pam Patterson in the city’s purchasing department, who will handle privilege licenses, and she recommended the city purchase an additional piece of software from Springbrook that can better track licenses. The city purchased new accounting software from Sprinbrook more than a year ago.
Ward 3 Alderwoman Sarah Smith asked what checks and balances were in place for checking privilege licenses.
Information technology director Eric Junkin, who has been charged with helping implement the new accounting software, said the previous use of the accounting system eliminated some of the checks and balances. Junkin said moving to Springbrook for license accounting should allow the city to better track the licenses.
The ultimate goal, Brown said, is to ensure all businesses have licenses so the city can collect sales taxes.
Ward 5 Mark Fortenbery asked if the taxes were just going to the state without any being collected from the city.
“No, none are being collected (at all),” Brown said.
The city’s code enforcement officers, Brown said, will be checking businesses for privilege licenses, which he said are supposed to be displayed at businesses.
Brown added that the city would also begin another effort as soon as possible to ensure the city is collecting the $2 hotel and bed-and-breakfast occupancy and food and lodging taxes from all businesses.
City Attorney Hyde Carby said the city was going to alert the state tax commission that the city has good reason to believe it is not collecting all the taxes and ask for the commission’s help.
Ward 6 Alderman Dan Dillard pointed out that getting the new software is essential so the city can ensure it is collecting taxes.
“This is the first fruits of this board’s effort to put this software in place,” Dillard said. “It is incumbent on the city to collect rightful taxes due to the city.”
Dillard, Fortenbery and Ward 3 Alderwoman Sarah Smith pointed out that it is unfair to business patrons who pay sales tax believing it is going to the city when in fact the businesses have kept it.
