A Brenner Pass meals tax bill went from $10K to zero
Virginia Restaurant Association says members have been hit with at least $1.5M in fees and fines.
Brad Hemp and representatives of about 30 Richmond restaurants gathered last week at The Tobacco Company Restaurant to hear members of the Virginia Restaurant Association express their frustrations with the city of Richmond.
The meeting came as city officials continue to deal with the current spate of meals tax issues they initially said dated to a 2020 moratorium implemented early in the COVID-19 pandemic by Mayor Levar Stoney and City Council. It was basically a hold on the self-reported 7.5% tax as the city’s economy was stunted by mandatory closures.
Michael Byrne, the restaurant association’s director, said the group simply wants the city to correct any inaccurate meals tax bills it’s issued. Members of VRA have reported between $1.5 and $2 million in fees and interest around the meals tax.
As those stories mount, no restaurant owner has publicly said they’ve had the fees fully waived — though the city has said it’s working with some business owners to address the problem.
Hemp, though, got his money back.
While applying for tax amnesty in 2020, he first discovered the restaurant was in arrears to the city — but didn't know exactly what for. To qualify for the tax moratorium, the restaurant's balance needed to be paid off. So, he sent the city about $10,000 — not $20,000, as initially stated in a Richmond Times-Dispatch story.
After qualifying for the amnesty program, the total was assessed down to $7,000. And after the Dispatch story ran, the finance department turned up documents with more detailed account information and sent them over. Hemp identified payments being applied out of order — as well as others he said were simply erroneous.
“I have this big meeting [with the city] and I say, ‘This all started from these two bills: A, both these bills are erroneous; and B, I wasn't notified of them,’” Hemp told VPM News. “So, any penalties or interest that happen, happen because of these bills that’re mistaken. You need to undo all this and give me the penalties and interest back.”
The entire process took about 10 months, and Hemp said the city fully refunded the payment in January 2021.
“This is essentially a fee factory. That's one way to think of it,” Hemp said about the city’s finance department. “It’s a way to just manufacture penalties in large amounts every year.”
Richmond’s finance department
John Wack was director of the finance department as the Brenner Pass issues were being dealt with. He currently serves as chief financial officer of Henrico County Public Schools and wrote in an email to VPM News that he left his post with the city in February 2021 “under excellent terms.”
He also referenced a city press release from that time announcing Sheila White, who now runs the department, as interim director.
“John has helped lead the turnaround of the city Finance Department during my administration,” Stoney’s quoted as saying in the release. It also notes Wack’s involvement in standing up amnesty programs aimed at helping city businesses during the pandemic, but eventually exposed the department’s problematic billing practices.
City officials have said that discussions around RVAPay — a now-partially implemented online payment portal for residents and businesses — stretch back years and will help address the current problems. Wack said that while working for the city, there were “ongoing attempts” to replace the city’s billing system, though he’s not specifically familiar with RVAPay.
Chef Brittanny Anderson — who bought out Hemp and another partner from the three restaurants — said if Hemp hadn’t waded through the city paperwork, it’s possible no one would have.
“The value of restaurants, I think, can't be overstressed. It really is a huge part of the city,” she said, while discussing her exasperation with the city meals tax. “And I would say, if people list five things about Richmond, restaurants are going to be in the top five.”
Even though Hemp solved the issues facing Brenner Pass, he’s continued digging into the city’s finance department and its billing practices.
He shared email exchanges with city spokesperson Petula Burks regarding the city missing his Freedom of Information Act request deadline. In an email Burks sent to Hemp over a recent weekend at 6 p.m., she wrote that the person who had been handling the public records requests “is no longer with the city.”
VPM News first submitted a FOIA request for materials related to the meals tax on Nov. 20, 2023. Emails were exchanged to clarify the request in late December, and Burks later discussed the process with VPM News over the phone. An incomplete response was sent Feb. 1, despite state law setting five business days as a deadline; a seven-day extension can be requested by the public body.
On Jan. 5, VPM News sent a separate FOIA request to Burks seeking a copy of any documents detailing the finance department’s guidelines for notifying taxpayers of payment issues, as well as a department handbook that would plainly lay out procedures. There was no further correspondence until Jan. 19 — a week after the city’s deadline to provide the requested information — when VPM News asked for an update.
The employee who Burks said no longer works for the city wrote at that time: “Regarding your 1.5.24 FOIA request, I have not received a response from the Finance Department. I sent a reminder on 1.12.24.”
The request for finance department documentation has not yet been fulfilled as of publication.
Megan Rhyne, executive director of the Virginia Coalition for Open Government, said these are administrative failures.
“Richmond has had one problem after another, after another, and they've come up with the most ridiculous reasons why they cannot comply,” Rhyne said. “They will continue to not comply until people push back.”
Last week, two open government advocates — Josh Stanfield and attorney Paul Goldman — filed a lawsuit against Stoney and other city officials after requesting meals tax information, but not receiving an answer within the five-day period stipulated by law.
Scope of the issue
After last week’s press event at the Tobacco Company, a number of restaurant owners — and Hemp — met with Lincoln Saunders, Richmond’s chief administrative officer, to continue discussing the issue.
The CAO said in January that 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.” The statement was later clarified by a city spokesperson, who said Saunders was referring only to people who had appealed their bill.
While speaking with restaurant owners last week, Saunders said the city will now review 500 accounts, according to Richmond BizSense. There are about 1,000 restaurants — including carryout, caterers, food halls and fast-food spots — in Richmond, according to the Richmond and Henrico Health Districts.
Saunders and Burks did not respond to multiple VPM News requests to discuss the account reviews.
The CAO did recently send a “Process Improvements” memo to council, further explaining steps that can be taken to improve communications between the finance department and taxpayers. Saunders also identified a September 2019 change in finance department policy that resulted in tax payments being applied first to delinquent bills.
As part of the adjustments outlined in the memo, the city’s set up a form to notify the department of any meals tax issues.
Disclosure: VPM News Director Elliott Robinson is on the board of the Virginia Coalition for Open Government.
Are you a Richmond restaurant owner who has experienced meals tax penalties and is willing to speak with VPM News? Reach out: [email protected].