At the beginning of March, Ketchum reported that 22 businesses had not delivered sales taxes for at least the two previous months and were being given 10 days to pay up or stop doing business.
That deadline has passed, and all but two businesses have responded by either paying everything owed plus fines or—in the case of a couple of businesses—working out a payment plan, according to Ketchum office assistant Kathleen Schwartzenberger.
She said the city has received about $4,024, but has yet to hear from businesses Source One Distribution and The Club at Bigwood.
The city's sales tax—also known as the local-option tax—is administered by businesses, which charge a 2 percent tax on lodging and by-the-glass liquor sales, and a 1 percent tax on retail sales and building materials. At the end of each month, businesses are legally required to hand over the money to the city.
The city then uses the money for city services and upkeep of infrastructure, such as streets, that see more use because of visitors. That's why the LOT is sometimes called a "tourist tax."
Schwartzenberger said the city will send notices to Source One Distribution and The Club at Bigwood within two weeks informing them that they've had their chance and now their sales tax permits are being revoked, meaning they can no longer legally do business. The city requires all businesses to have sales tax permits. Businesses operating without one are subject to a fine of $300 for every month their doors remain open.
Even if these two businesses shut down after their permits are revoked, the city could still obtain any money it is owed by placing liens on the properties for the amount owed. However, a lien would not secure the city's money until the property is sold.
Business owners who decide to pay up after their permits have been revoked will not be on the hook for just the original amount, but for three times the business' monthly average of the past year.
Schwartzenberger said a few of the 20 businesses that eventually cooperated didn't do any business at all during the previous months or simply closed down, meaning they didn't owe the city a dime in local-option taxes. Nevertheless, they never reported that to the city by filing a sales tax return.
"They're still delinquent," Schwartzenberger said. "It's still their job to send in a return. I don't know if they had any business or not."
She said several business owners called her claiming their sales tax returns were late because their bookkeeper was out of town or sick, and wanted some leniency.
"A credit card company wouldn't understand if you were late," she said.
Schwartzenberger said the city revoked only three sales-tax permits in the three years from 2007 to 2009.
City Clerk Sandra Cady told the City Council on Feb. 1 that the clerk's office had been lenient with businesses during the past couple of years due to a troublesome series of events—including the 2007 Castle Rock Fire and the recession—putting businesses at risk. But, she said, some businesses took a mile with the inch they were given.
Cady told the council on Feb. 1 that 15 businesses had been delinquent at that point, in some cases not handing over LOT for more than a year's time.
The Ketchum City Council vowed, at that same Feb. 1 meeting, to be strict from now on with the city's LOT rules and deadlines.
Trevon Milliard: tmilliard@mtexpress.com
