SOUTHINGTON – There will be no audits of local businesses this year, and town officials will conduct an educational campaign to improve personal property reporting.
However, the town’s tax assessor may call for an audit or similar action next year.
While business owners must list equipment, machinery and other items related to their businesses, the town’s assessor, Teresa Babon, said nearly 500 refused to do so, or did not specify what property they owned . That forces her to make her best guess as to what their taxable estate is worth.
Businesses are taxed on real estate and motor vehicles, in addition to smaller items such as computers, office supplies and furniture.
Hiring outside firms to audit local businesses could generate about $2 million in new taxes, according to firms considering the job.
But town council leaders are hesitant to audit local businesses at a time when many local businesses are struggling to stay afloat.
Council President Victoria Triano was pleased with a plan presented by Babon on Monday that would include letters and information sessions for business owners explaining what they must declare on their personal property. She hopes business owners will properly declare their personal property once they know how to do so.
“I also believe, and I would like to believe, that people who don’t know need to know because they want to do the right thing,” Triano said. “I expect it to be great.”
The program to audit businesses includes only those businesses that have declared or estimated personal property in excess of $50,000.
Democratic Rep. Val DePaolo said that doesn’t evenly distribute the audit burden.
“Is it really fair to go after all these big and mid-sized companies? It’s really not fair,” she said. “It’s a really tough time for businesses right now.”
Paul Chaplinsky, a Republican and vice chairman of the city council, said sending letters and messages could also raise taxes. This approach avoids paying the audit firm and keeps all the extra taxes for the town.
Babon said she “reserves the right” to call for a town-wide audit if this year’s education efforts are insignificant.
“I’ll be back (next year) to tell you how personal property declarations have improved. Hopefully I’ll see an increase, an improvement,” she said. “If that’s not the case, I’d like to have the opportunity to have more discussions about how we can improve.”
At the last council meeting, Babon outlined her efforts to get businesses to file the required documents. For businesses that do not file a personal property declaration, Babon guesses at the value of the personal property and adds a 25% penalty.
“Those people still don’t declare because it’s cheaper not to declare,” she said.
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