Under a proposed ordinance introduced at the May 15 City Council meeting, a first offense for a business owner’s failure to remit sales tax would go from a Class B offense — which allows for a jury trial and has maximum penalties of six months in jail and a $1,200 fine — to one that’s Class A, which has a maximum fine of $500 and no jury trial.
Although monetary penalties would be reduced, the change would make for quicker prosecutions, give the city treasurer more flexibility in dealing with cases, and allow a separate fine for each day a business fails to turn over sales tax it has collected, according to City Finance Director Craig Freeman.
Currently, he said, there are about 1,100 businesses with active sales tax accounts going back several years that owe around $17 million in city sales tax.
Of that $17 million, an estimated $15 million is owed by only 100 of those businesses, Freeman said.
“At the end of the day, the goal isn’t to issue citations, the goal is to collect the sales tax,” he said. “We’re targeting those who are not complying with the law.” While sales taxes are collected by the Oklahoma Tax Commission and distributed to the various cities, the OTC has limited resources to fight businesses that collect the taxes but fail to turn them over to the state, Freeman said.
“We think we can be more strategic in the way we’re approaching this and target the businesses that are the largest offenders,” he said. “We think we can work in partnership with the Tax Commission and get better results.”
Cuts to the OTC by the Legislature have put both cities and the state in the position of reducing its own revenue stream, said Mayor Mick Cornett.
“What we’re saying is we don’t necessarily think [the OTC has] the enforcement abilities to go out and collect the tax for us,” Cornett said.
“Their issue is their issue, but as far as we’re concerned, we’re not getting the type of enforcement and compliance we need.”
City Manager Jim Couch said racking up prosecutions isn’t the goal of tweaking the ordinance to allow for more flexibility.
“Our goal is to get some notice out there and get some attention and try to get these people to follow the law and submit the taxes they’re most likely collecting,” he said.
The proposed change will be brought before the council two more times prior to a vote.