SOUTHINGTON — An audit of local businesses won’t take place this year and town officials will instead work on an education campaign to improve personal property reporting.
The town’s tax assessor may request an audit or similar action next year, however.
While business owners are required to list equipment, machines and other items associated with their company, the town's assessor Teresa Babon said nearly 500 refuse to do so or don't specify what property they have. That forces her to make a best guess as to the value of their taxable property.
Businesses are taxed on real estate and motor vehicles in addition to smaller items such as computers, office supplies and furniture.
Hiring an outside firm to audit local businesses could have generated about $2 million in new tax revenue according to a company considered for the work.
But Town Council leaders were hesitant about audits of local businesses at a time when many of them are struggling to stay afloat.
Victoria Triano, the council chairwoman, was pleased with a plan Babon presented Monday that included letters and information sessions for business owners about what they have to declare in personal property. She expected business owners would declare their personal property correctly once they knew how to do so.
“I also believe, I want to believe, that people who don’t know need to know because they want to do the right thing,” Triano said. “I anticipate this is going to be great.”
The plan to audit business included only those businesses that declare or are estimated to have more than $50,000 in personal property.
Val DePaolo, a Democratic councilor, said that didn’t evenly distribute the burden of the audit.
“Is it really fair to be going after all these medium sized and large companies? It’s not really fair that way,” she said. “It is just such a tough time for businesses right now.”
Sending out letters and information will likely also result in an increase of tax revenue, according to Paul Chaplinsky, a Town Council Republican and vice chairman. This method avoids paying the auditing company and keeps all the extra tax revenue for the town.
Babon said she “reserved the right” to ask for a town-wide audit if the results of this year’s education efforts are meager.
“I’m going to come back (next year) and tell you about how the personal property filing improved. Hopefully I’m going to see an increase, an improvement,” she said. “If that’s not the case, I would like the opportunity for additional discussions on how we could improve.”
During the last council meeting, Babon outlined the efforts she’s already made to get businesses to submit required paperwork. For businesses that don’t submit personal property declarations, Babon makes a guess as to the value of personal property and adds a 25 percent penalty.
“Those people still don’t file because it’s cheaper to not file,” she said.