January 26, 2015
Monday PM

The New Year offers everyone an opportunity to start fresh. Starting fresh can be something personal like improving your diet or health, but it can also be something community oriented, like doing a better job of doing your part for the community. For some businesses, one way to be better at doing your part as a better member of the business community is by keeping on top of your obligations to collect and remit sales taxes.

As of the end of the third quarter sales tax filings, 173 businesses were delinquent in filing or submitting the sales taxes they collected from consumers. That represents approximately 8 percent of the 2,128 businesses operating within the Ketchikan Borough. When a business sells a product or service within the Borough, the sales tax monies they collect are to be held in trust until they file their sales tax return and transfer the money to the Ketchikan Borough. The tax money is not property of the business, once collected from the purchaser it belongs to the local governments that levied the taxes, and thus needs to be transferred to the Borough which is responsible for collection of all sales taxes levied within the Borough. Sales taxes are used for our schools, hospital, and other essential local services and facilities. To not remit the money held in trust for the public is at best a bad business practice, and at worst a form of theft from the public. Either way it is wrong, and is something which calls for a fresh start and doing the right thing.

There are consequences for not being a proper steward of the public’s money received in trust. One obvious consequence is an increase in the amount due because of penalties and interest for late payment. If there is no filing, the cost may be greater on an estimated return. It is the Borough’s duty to collect the sales taxes owed to the public. When tax returns are not filed timely, the return is then delinquent and the Finance Department makes an estimation of the taxes owed and the business is subject to receiving a $50 citation for the first offense and $250 for a second offense. The two citations would approximate paying the City and Borough tax on $4600 in business sales. If a business owner has closed his or her business, a final return must be filed with the Borough and the collected taxes paid or they will once again face the possibility of receiving citations.

Those individuals owning businesses delinquent in their sales tax returns would be well off bringing their sales tax returns up to date. With the current economic times arrangements can be made with the Borough Finance Office to make timely payment on funds owed the Borough and submitting the necessary reports. If the Borough has to resort to citations or court action to collect amounts due, the costs increase even more. It is financially best to submit sales taxes collected rather than be charged interest and penalties, or receive citations and deal with additional problems for not filing returns.

The Borough prefers not to impose penalties and pursue collections against businesses, but has a duty to do so on behalf of the community because it is the right thing to do. We hope that all the businesses out there will do the right thing and file and remit the sales taxes they have collected on time, and file a closing return if they are ceasing business. Let’s all use the New Year to make a fresh start. The 4th quarter returns are due by February 2.

Received January 23, 2015 - Published January 26, 2015

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