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Virginia Restaurant Association aims for legislative meals tax fix

Shaban Athuman
VPM News
Michael Byrne, director of the Virginia Restaurant Association, sits at The Tobacco Company Restaurant in Richmond on Monday.

The proposal would amend several sections of current state code.

Michael Byrne’s worked in the restaurant industry for decades and, as director of the Virginia Restaurant Association, he’s shaping legislation to address recent issues around Richmond’s meals tax issues.

Sen. Bill DeSteph (R-Virginia Beach) is sponsoring the proposal.

Incoming Del. Rae Cousins represents District 79, which covers a portion of Southside Richmond, as well as Shockoe Bottom and Church Hill — home to a number of prominent restaurants. She’s also senior counsel at BrownGreer.

“It will just take us lobbying for these efforts and making sure that we have support for the legislation to pass,” said Cousins, who hadn’t yet seen the proposed bill. “In terms of the process, once the bill is introduced, it has to go before a committee, and then if the committee decides to report it out to the floor, then that's where we'll take a vote.”

The Democrat said she isn’t working on the legislation — which, if passed by both the Virginia House and Senate, would still need to be signed by Gov. Glenn Youngkin — but added she’s “confident” Mayor Levar Stoney and his administration are “researching and investigating the issue.”

Multiple Richmond-area lawmakers contacted for comment on the proposal did not respond by publication time. The General Assembly's session opens Wednesday.

MDB Strategies lobbyist Matthew Benka, who’s working with the restaurant association, shared a redacted draft of the legislation with VPM News on Tuesday.

The bill would amend several Code of Virginia sections to codify taxpayer notifications over late fees, limiting those fees and enabling courts to “award reasonable attorney fees to the prevailing party” if a locality and business end up in court.

“We're kind of walking our way through new territory,” Byrne told VPM News. “We didn't know how big this problem was two weeks ago. And in seven days, I've got 25 restaurants calling me to say, ‘Let me tell you my story.’”

Kevin Grubbs, who owns Latitude Seafood Co., was with Byrne when he spoke to VPM News on Monday. He said he’s considering legal action against the city after paying about $68,000 for what Richmond’s finance department said are late meals tax payments and interest.

Last week, during a live-streamed press conference, Richmond Chief Administrative Officer Lincoln Saunders said the city would meet with certain businesses affected by the meals tax issues.

That hasn’t happened yet for Grubbs.

“They reached out to me last week to set up a meeting, and now they’ve been ducking my calls, my emails,” Grubbs said, declining to say whom from the city he’d spoken with. “I have messages in writing, saying that that's going to happen. … I can't tell you whether I think that's going to happen or not.”

Samuel Veney, a co-owner of Philly Vegan, did meet with city officials Monday. Veney’s social media post on Jan. 2 — along with Grubbs’ open letter on Dec. 28 — made the meals tax issues public.

“I can’t go into details but what I can say is that we made our voices heard today and we are hoping that our stories, our unified voices will lead to systemic changes that will prevent this from happening to others,” Veney told VPM News via text.

During last week’s press event, Saunders said the city’s “dealing here with a handful of cases that have kind of worked their way through the review and appeals process, haven't been resolved and are where they are.”

Byrne and others have taken issue with Saunders’ initial description of the problem’s scope.

“When the city says it's just a handful of restaurants, and one guy — Mike Byrne — talks to 25 restaurants in a week that have what amounts to well over a million dollars’ worth of penalties and interest, then it's obviously a bigger problem than anyone's acknowledging,” Byrne said.

In April 2023, a city audit of the finance department — addressed to Saunders with City Council and Finance Director Sheila White copied — indicated that between “July 12, 2022, and December 19, 2022, approximately 1,500 letters were sent to 491 businesses” regarding late payments.

A city spokesperson clarified Saunders’ statement Tuesday via email, writing that the CAO was commenting only on people who have begun the appeals process, and maintained that at least a portion of the 491 people who were sent late notices received accurate account information.

According to the Richmond and Henrico Health Districts, 1,033 restaurants — including carryout, caterers, food halls and fast-food spots — operate in the city. That means more than 45% of Richmond restaurants would have received a late notice during the six-month period covered in the audit.

Since Latitude and Philly Vegan made their difficulties public, the city’s maintained it regularly sends restaurants notices if a business is in arrears.

Saunders last week reaffirmed that stance, adding the caveat that notices were paused for several months during the COVID-19 pandemic. But according to that 2023 audit, prior to restarting the late notices, “businesses were only notified of outstanding balances if selected for a tax audit, when tax enforcement or delinquent collection efforts were initiated, or they requested an account reconciliation.”

VPM News asked the city to clarify the finance department’s policy on notifying businesses of missed payments and balances.

Richmond communications director Petula Burks emailed the following statement: “As a part of the city’s ongoing continuous improvement and in response to the most recent audit, we are reviewing and updating policies regards to businesses with delinquent bills.”

Are you a Richmond restaurant owner who has experienced meals tax penalties and is willing to speak with VPM News? Reach out: [email protected].

Updated: January 10, 2024 at 10:52 AM EST
Added information about the proposed legislation's sponsorship.
Dave Cantor has been an editor with VPM News since 2022, juggling daily digital and broadcast stories.