Committee approves consultant to track down unpaid business licenses
The Augusta Commission is finally getting close to moving ahead with assigning a contractor to go after delinquent business tax revenue.
The idea of a so-called headhunter, first broached by Commissioner Jerry Brigham at a commission retreat about a year ago, has been tinkered with and adjusted over the last several months into a contract both the city and the contractor appear to be happy with.
According to Planning and Development Director George Patty, the two sides had a difficult time deciding on the scope of the project.
Basically, the question was whether to go for all delinquent taxes owed the city, including excise taxes, which includes things like the hotel/motel tax and the transportation and tourism fee, or limit the search to the occupational tax.
“We looked at the various excise taxes that we collect, which is a substantial amount of money,” Patty said. “But a lot of that money would not affect the general fund, and it was much more complicated than getting this consultant to just look at the business license revenue.”
Patty says that compared to the excise tax, the occupational tax, commonly called a business license fee, is relatively simple to track down, and after discussing things with the consultant, he and his staff have come to believe there might be a lot of it out there.
“We believe that, because of the way the economy has evolved, big companies have a lot of independent contractors because nobody wants to have employees because of the workers comp and healthcare and those sorts of business expenses,” he says. “We believe that a lot of these big companies — retail, industrial and institutional — that have a lot of independent contractors under their belts have contractors that aren’t properly licensed.”
The reality, he says, is that a lot of these independent contractors haven’t gotten the licenses they need, and those can be relatively expensive licenses.
“I think there’s fertile ground out there for this consultant,” Patty says.
The consultant is Public Resource Management Alliance Corporation (PReMA Corp.). PReMA serves governments in Alabama, Tennessee, Georgia and Colorado.
As envisioned by Brigham, the contract doesn’t cost the city a dime. The contractor will work on a contingency basis and collect half of what he finds.
“We think that with the 50 percent of whatever they find plus the experience that our agents are going to get in dealing with these people, it’s going to be a plus for the city,” Patty says. “We’re looking forward to it.”
The consultant, who will be able to go back and collect over three years, will actually discover and collect, Patty says. They’ll find those accounts that are payable and they’ll collect the money and put it into a kind of lockbox, where it’s later split by the city and the consultant.
“Initially, the contractor wanted to make three attempts to collect and then hand it over to the city and the city would be responsible for collecting, and we’d pay the consultant whether we collected or not,” Patty says. “We, of course, were not willing to do that, so the way it’s written now — they make their three attempts to collect and then they’ll turn it over to the city and the city will make a decision at its own discretion whether to go farther with it or not.”
They’ll certainly go after the big accounts, he says, but something small, like an $88 license to write music for a church, they most likely wouldn’t take to court.
As for how much money might be out there for the finding, Patty says he has no idea, but in talking with other communities, he says he doesn’t think Augusta is alone with the problem of uncollected occupational tax.
“What I found was that they’re all pretty much doing what we’re doing or a lot less,” he says. “Some of the cities don’t even have employees that attempt to collect — it’s sort of on an honor system.
The consultant’s ability to discover and collect runs for one year, with an additional three months to collect anything uncovered because of their activities. You Might Also Like: