Kent tracks down companies not paying B&O tax

The city of Kent continues to round up more businesses who aren’t paying the business and occupation (B&O) tax.

“We have identified 29 new taxpayers and collected $487,000 in delinquent taxes,” City Finance Director Aaron BeMiller said at a City Council workshop on May 19.

That’s the number tracked down just in the first three months of 2015. City staff expects to find more businesses to pay the tax that became effective in 2013.

Councilman Jim Berrios asked the finance department how it has found businesses that aren’t paying.

“We have identified them in several ways,” said Barbara Lopez, city financial planning manager. “We have people who ride the train to work in the morning and they have seen (business) names they recognize and names they don’t recognize. We have done some drive-arounds and found a couple of others. Sometimes the taxpayers come forward saying this came on our radar and we haven’t been paying it.”

In 2014, 2,483 taxpayers filed the B&O returns. A total of 1,463 of those paid the tax while 1,020 filed but didn’t pay because the businesses gross revenue numbers were lower than the $250,000 exemption or other waivers. A total of 405 taxpayers (16 percent) contributed 90 percent of the revenues collected.

The council last year approved four new positions to staff the B&O program in an effort to boost tax revenues.

“The total costs in 2015 to operate the program are estimated at $550,000, about $157,000 less than budgeted,” BeMiller said.

The first $700,000 or so of the tax revenue goes to cover staff costs. The tax brought in about $6 million last year with most of the money spent on street repairs.

The funds in excess of a $4.7 million cap go to help pay down city debt in the capital improvement fund, although all money will go to streets starting in 2017. The council approved an amendment to the ordinance in early May to overturn a veto by Mayor Suzette Cooke who wanted to continue to use the excess funds to pay down debt.

Kent also plans to hire a compliance officer by the end of the summer as part of the B&O staff to join the tax auditors.

“We are building the job description for the compliance officer and once that officer comes on board you will see that officer go to businesses and if there is not a license will report that,” BeMiller said about finding businesses that have not even taken out a business license let alone paid the B&O tax.

City staff also plans to track down companies that apply for business licenses but aren’t filing the B&O tax.

“We know we have people who apply for business licenses. Are we collecting from those?” Berrios asked city staff.

“We will use that more when we bring on our compliance officer,” Lopez said.

“It sounds to me like we still have a lot of money on the table,” Berrios responded.

Lopez agreed with the councilman.

“We do,” she said. “And little by little we are going at it. It’s not going to be an overnight thing but we are getting better every day at figuring those folks out. … I’m not certain you ever reach the point of having them all rounded up but we are making significant progress.”