One county commissioner said there is “money laying on the floor” around Sampson and commissioners needed to pick up those much-needed dollars — through business tax audits.
“When I first came on the Board of Commissioners, one of the things that came up was a business tax audit,” said Commissioner Albert Kirby. “A lot of people don’t like it and a lot of people don’t understand. The time for the business tax audit has come. There are individuals who may inadvertently or directly not be paying. The thing that concerns me is we may not be in that bad a shape.”
He noted another county that was able to garner several millions of dollars of taxable property and subsequently reduce its tax rate.
Sampson County’s proposed 2014-15 budget currently calls for a 5.25-cent hike, which would boost the rate from its current 78.5 cents to 83.75 cents per $100 valuation.
“We really have to look at that because we need some money,” Kirby said during a budget session last week.
The county is operating under an interim budget for the next month, or until a full budget is adopted. The county’s budget currently totals approximately $97 million, with county taxpayer support making up about one-third of that amount, at close to $34 million.
“We could be losing a lot of money by not doing the business tax audit,” Kirby attested. “I understand the position of other board members. I’m not talking about slamming people or anything like that, but doing it in a gentle, kind way. You’re not really punishing anybody, you’re just educating them.”
The matter was brought up at last month’s budget public hearing.
County Tax Office employee Susan Heath, who sees those tax bills come in each year, said the solution to Sampson’s budgetary woes was not raising taxes but increasing tax base. To do that, all existing businesses need to be on the books and their records need to be accurate, she said.
“That’s the only way to generate more income,” Heath noted at the hearing. “We think, as a Tax Office, we should do more business personal audits. There’s tons of equipment in this county and tons of things going on with businesses that are not listed and are never checked up on.”
In 2010, the county board commissioned a Charlotte company to scour Sampson for revenue in the form of unlisted businesses and unreported taxable property. That one-year contract was delayed but took effect toward the end of 2011.
Letters were sent out and efforts made to reach out to all businesses in the county and ensure they have filled out their tangible personal property return, as required by state statute. The law requires that every business list their business personal property annually, on or before Jan. 31.
The company was commissioned by the county as part of an ongoing search for “revenue enhancements” during the economic recession to find businesses which, for whatever reason, may have failed to list that property. It was not a business personal property audit, but deemed a “discovery program.”
The program had its share of snags initially and some commissioners took issue with the wording in letters that were sent out to Sampson residents. Those letters provided value estimates for property that drew the ire of Jarvis McLamb and Billy Lockamy at the time as being “fictitious numbers.”
During discussion last week, Lockamy said the bad taste from that experience was still in his mouth.
“I pay my fair share of taxes and I know everybody else does too,” Lockamy said. “One time we said we were going to do (this) and it was chaos. It was flim-flam and I’m not in favor of anybody going out there and doing that on commission. I know our tax administrator doesn’t have the staff, but he’s doing it in the right way and I think the professional way.”
He recalled portions of a letter that he said used inaccurate estimates of property values. Those letters told property owners to complete an enclosed personal property listing form on the unlisted property and mail it within 30 days, or have an explanation as to who owns the property. If they do not fill out the proper form, it is considered delinquent, the letters said.
“If you don’t report back to me in 10 days I’ll assume you’ve got $30,000 worth of equipment and that’s what we’re going to tax you for,” Lockamy noted, paraphrasing the letter. “Those things have happened before with an audit. I’m not in favor of that again.”
County manager Ed Causey said some studies show that the county could realize as much as $600,000-$700,000 in revenue a year as a result of business tax audits.
Kirby mentioned the possibility of holding community meetings to educate people on how to properly list property, with no punitive “teeth” attached.
“That doesn’t get you your money,” Finance officer David Clack stated.
“I know it doesn’t, not to start with,” Kirby replied.
“It won’t for years and years down the road,” Clack said.
Kirby said that a business tax audit process, along with other revenue generators, could put the county in a more sound position. One of those other revenue sources could be an additional 1/4-cent sales tax.
A resolution was approved in a split vote — Kirby and Commissioner Harry Parker voted against it — at the end of May for legislators to allow for an additional 1/4-cent sales tax to be placed on the ballot. That tax would generate just over $900,000 a year to the county, equivalent to between 2 and 2.5 cents on the property tax rate. The county would net about $850,000 of that sum, with roughly $60,000 to be split among the municipalities.
The county’s current tax rate stands at 7 cents. The referendum, if approved by voters in November, would take that to 7.25 percent effective April 2015. More than 70 percent of the county voters approved the previous sales tax increase.
Kirby said employee raises, for one, would not be as arduous a task if county coffers were spilling over with new, recurring revenue.
“Add (additional sales tax) to the business tax audit, and we could double their salaries,” Kirby said cheekily.
Chris Berendt can be reached at 910-592-8137 ext. 121. Follow us on twitter @SampsonInd.