Some of the most profitable firms in Roswell paid much less in taxes in 2019 and 2020 because of a mistake in how the city set tax rates for business license fees, a city councilwoman said.
The fees are the occupational tax that companies pay to run their businesses in the city of Roswell. No business in Roswell paid more than they should have but the business occupational tax rate set for industries such as real estate and rental and leasing was half of what it was in 2018.
In 2019 as well as this year, city staff used a different IRS data source than it had been using to set the tax rate, Finance Director Ryan Luckett said during a City Council work session Tuesday.
Luckett and other city officials said the data used was not a mistake, but Council members debated on how to apply the business occupational tax structure for 2021. Charging businesses the same amount in 2021 as was charged in 2018 was suggested.
Roswell businesses reported $4.6 billion in gross receipts in 2019 and the city received $1.6 million in occupational taxes, about $500,000 less than expected, according to Luckett’s presentation.
Councilwoman Christine Hall told The Atlanta Journal-Constitution that she discovered that the city used the wrong data source for business tax rates in August after weeks of trying to figure out how revenue fell short.
In 2018 city staff used an older IRS data source for all business types, Luckett said in the work session. But in 2019, a more recent IRS data source was used and it didn’t include all business types, thus the change in some of the tax rates.
Some council members say the uncollected monies from large profitable businesses could’ve paid for sidewalk and other infrastructure improvements.
“We just left that money on the table,” Hall told the AJC. “That’s just the way it was.”
Roswell collects less money in business license fees than other neighboring cities. Luckett said a new car dealership with $83 million in gross receipts would owe Roswell only $9,600, but the same business would owe Sandy Springs $75,000.
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