Feb 2, 2024 - News

Some Richmond businesses could get credit for meals tax issues

Illustration of a one hundred dollar bill with a returned to sender stamp on it

Illustration: Sarah Grillo/Axios

Richmond might be refunding hundreds of local businesses some money as it reviews issues stemming from reports of massive meals tax bills.

What's happening: The city is reviewing around 500 cases where businesses could've been assessed excessive late fees on tax bills due to a 2019 change to how it processes tax payments, WTVR reports.

Why it matters: It comes after more than a dozen Richmond restaurant owners came forward in recent weeks to share their massive delinquent bills.

The latest: City officials only recently became aware of the 2019 payment processing change, chief administrative officer Lincoln Saunders wrote in a letter to City Council this week.

  • The change was made because its finance department was advised that state law required any payment to go to delinquent amounts first.
  • That change resulted in compounding interest on late tax payments that could snowball for multiple months.

Plus, since the city didn't start sending delinquency notices to affected businesses until July 2022 — and because it didn't send out notices about the 2019 policy change — it plans to begin manually reviewing accounts.

  • In the second half of 2022, more than 45% of Richmond restaurants were considered late by the city, a VPM review found.

The city is also adding staff to its finance division to help with the workload, according to the letter, and:

Worth noting: State law requires tax payments go to delinquent amounts first, but it provides a clear exception for localities to write their own policy.

Meanwhile, in other meals tax news, two Richmonders have filed a lawsuit against the mayor, the CAO, the city inspector general and the city's finance director for not responding to multiple FOIA requests, per the Times-Dispatch.

  • Political strategist Paul Goldman and Josh Stanfield, a transparency advocate (who was part of the lawsuit against Richmond School Board over the release of the graduation shooting report), are asking for any documentation and communication related to the meals tax from January 2017 through now.
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