Columbus Council Spent Two Hours Discussing Delinquent Licenses, Taxes

During the most recent Columbus Consolidated Government meeting, a follow-up to an independent audit of the business license revenue division was presented by Troutman Pepper Law Firm and Pamela Hefner of Acuitas Inc.

The original audit was presented in January of 2024 and uncovered a backlog of unprocessed business and liqueur licenses and millions of dollars in delinquent business license renewal fees and unpaid taxes.

During a presentation which lasted nearly two hours, Hefner explained changes the city has made to collect delinquent funds from 2017 until now.

The initial audit showed that between 2017 to 2023 there were 24,896 delinquent businesses licenses and 532 delinquent alcoholic beverage licenses resulting in a loss of an estimated $5 million.

However, as of Oct. 7, 2024, the Revenue Department has worked to reduce this number by working with Code Enforcement and hiring additional personnel.

Still, even after this effort, the city has 18,223 delinquent businesses licenses and 320 delinquent alcoholic beverage licenses. Of those businesses 14,600 are still in operation, while 3,623 businesses have closed but still owe licenses fees and taxes.

Counselman Glenn Davis said the estimated outstanding revenue needs to be revised because some of those funds won’t be collected. He said legally the city/county can only go back four years based on the statute of limitations.

“We will never know what that amount of money is. It is gone. You won’t be able to collect it, but we are still taking about those numbers,” Davis said. “Is there some point and time when we need to just clean the books get it all out and start all over. We’re about to go into 2025 another year.”

According to Glenn the Council should only look at the numbers from 2021 forward.

Hefner said despite citing businesses, many of them refuse to pay their fees, especially those who have headquarters out of the city but conduct business within the city limits. Another issue she said that causes problems is changes in ownership, while keeping the same name and location.

Code enforcement has investigated roughly 1,000 businesses, according to Hefner, but they cannot visit headquarters outside of the city, which accounts for roughly 600 businesses who haven’t paid.

City Manager Isiah Hugley said that franchises operating within the city limits also do not want to pay for a business license and he called on business by name.  

“Local businesses, I want to note, are a challenge for code enforcement and I hate to be specific, but we’ve been to court four times with Chucky Cheese,” Hugley said. “And now we’ve retained outside lawyers to deal with Chucky Cheese because they won’t get a business license. So, the challenge is not just out of town (businesses), but some of them are right her in Columbus and we’ve been to court and the court will fine them, I’m going to say $100, and they just go back to making pizza and having kids come in and play.”

Overall, Hefner said the government had made significant strides in alleviating the backlog of licenses and unprocessed fees at the Occupational Tax Department.

They interviewed tax technicians, visited offices, and reviewed the recommendations of the initial audit report to see if changes have been made

“In summary, we found that there has been meaningful progress by the OTD toward clearing the backlog of licenses and implementing the recommendations identified in the report,” she said, adding that the most significant risk to this progress is staffing shortages and the greatest area for growth opportunity was in automation of the payment system.

“The OTD has instituted many of the recommendations in the report,” Hefner said.

This year, the ODT launched a pilot program for online filing of mixed drinks and short-term rentals excise taxes to use as a test before expanding to other occupational tax categories. Yet, there is still significant work to be done to gain the benefits of a truly automated system, according to the updated report.

The office is also working with the City Attorney’s Office to take legal action to collect the delinquent fees, especially against closed businesses. Businesses that are no longer in operation must still file a final tax return and pay taxes on the revenue they earned before closing.

Staffing also played a part in the delinquencies, according to Hefner.

However, from Dec. 2023 to June 2024 the OTD operated with six technicians - three permanent and three temporary - plus a temporary administrative assistant.