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Richmond doesn't know how many tax accounts have credits

The Richmond finance department
Shaban Athuman
VPM News
The Richmond finance department is seen on Tuesday, February 27, 2024 inside City Hall.

City Council is considering a proposal that would require taxpayer notification within 90 days of an overpayment being made.

Richmond’s finance department does not proactively notify residents or business owners of credits on their accounts — and cannot tally the total number of accounts with a credit because of the antiquated software it uses.

Each city business has at least two siloed accounts: one for money owed to the city and another for money that's been paid. Because of the software Richmond is using — called MUNIS — a finance department employee would need to check the balance of each account and manually reconcile the amounts to determine whether an overpayment’s been made.

“We are not going to know that a taxpayer — in this case meals tax — has overpaid unless [a business owner notifies] us that they've overpaid,” city spokesperson Petula Burks said on Friday, after not providing a response to questions sent the previous day by deadline.

A taxpayer needs to specifically request the finance department perform an accounts reconciliation to determine a balance. Burks did not know where money for potential reimbursements would come from.

A proposal, which was forwarded Thursday from a committee to the full City Council, would require taxpayer notification within 90 days of credits or overpayments on “admissions, lodging, and meals taxes and business, professional and occupational license taxes.”

The measure will be voted on March 25, during the next full council meeting.

Councilor Stephanie Lynch, Mayor Levar Stoney, Council President Kristen Nye and Council Vice President Ann-Frances Lambert cosponsored the ordinance.

Lynch said the issue was brought to her attention last year, though there’ve been discussions around credits and overpayments going back to at least 2017. About three months into Stoney’s first term, the Richmond Times-Dispatch reported that the city paid an unidentified business owner $475,000 in interest after a tax bill overpayment.

“I don't know why that hadn’t been done previously. I can't tell you the historical context there,” Lynch said, while discussing her proposed ordinance. “But it sounded like one of those good ideas that maybe someone had popped up or a recommendation that somebody had popped up with in the past, and then no one kind of carried the ball forward.”

The proposal would create an additional process for Richmond’s finance department, which has struggled to provide timely and accurate information to some taxpayers.

Lynch said she recently visited the department and saw “boxes and boxes and boxes of paper” records. But the proposal could dovetail with city efforts to implement digital solutions to ease the tax payment process for business owners — and city employees attempting to reconcile disparate accounts. A firm date for the full implementation of RVA Pay across city departments hasn’t been announced, but could come by the end of 2024.

In city paperwork accompanying Lynch’s proposal, a section offering background information on the issue stated: “Neither State nor City code currently require the City to inform the taxpayer that they have any credits.” It also noted that state code requires a request to be submitted for the funds to be distributed.

While current city code does not require notification, it indicates that overpayments are to be returned: “Whenever the Director of Finance determines that any taxes due under this chapter have been erroneously assessed or that payments have been remitted in excess of the taxes due the City, the Director shall refund such erroneous or excess tax payments with interest at the same rate as charged by the City for delinquent or omitted tax payments.”

Finance Director Sheila White spoke briefly during the Thursday meeting, saying that she and the mayor’s office support the proposal.

Nye said her office assisted “behind the scenes” in drafting the ordinance.

“There were discussions that we had, just wanting to ensure that whatever process there is, that it's simple and easy,” Nye said. “If somebody does have an overpayment and gets a statement, then they can easily just turn it around or go online, make that quick application and get their refund in a timely manner.”

Gianni Snidle sent a statement from the mayor’s office.

“The City of Richmond has been working diligently to implement a number of enhancements to our existing processes and systems across divisions, including the Department of Finance,” he wrote. “The proposed tax refund ordinance complements these broader, ongoing efforts to establish the best possible processes in service of our community.”

Knowledge of meals tax issues

The overpayments proposal follows finance department issues around the city’s meals tax, a 7.5% self-reported tax remitted monthly by restaurants. In January, some Richmond business owners spoke out over what they said were inaccurate and inflated bills.

At a March 4 committee meeting, Councilor Reva Trammel expressed concern over how long other members of Richmond City Council were aware of the billing issues.

“How come all of us were not informed? Or how come all of us did not know about this?” she asked.

At least two members of Richmond City Council were aware of meals tax billing issues as early as mid-2022.

When now-Del. Mike Jones was a council member, he said, he was made aware of the problems Philly Vegan was encountering. A Philly Vegan co-owner confirmed the interaction. Jones also said that he passed the information along to Chief Administrative Officer Lincoln Saunders.

At the time, Philly Vegan was appealing its case with the finance department; it was eventually denied. Samuel Veney, a restaurant co-owner, declined to discuss what arrangement he’d reached with the city since the issues were made public earlier this year.

“If it’s a case [that] is under appeal, I would not request information or get involved,” Saunders told VPM News recently. “Where we are now is that, before an appeal is finalized, the city attorney and I are going to review the appeals before they go out. So, that's an enhancement to our process.”

Nye also said she knew about some problems that businesses were having prior to this year.

“I think how we're handling it now is more consistent with how other localities across Virginia handle cases, where businesses should get the benefit of the doubt,” Saunders said.

Updated: March 22, 2024 at 5:35 PM EDT
Added comment from city spokesperson, as well as context for how overpayments are determined.
Dave Cantor has been an editor with VPM News since 2022, juggling daily digital and broadcast stories.