NEW ORLEANS – The City of New Orleans announced the implementation of new tools to further improve sales tax collections. During yesterday’s Regular Meeting of the New Orleans City Council, ordinances were approved to strengthen enforcement and give the City more tools to hold businesses accountable.
“Since I came into office, we have worked with our partners on the New Orleans City Council to dramatically increase the City's sales tax revenue by 48 percent,” said Mayor Mitch Landrieu. “But there is still more we can do to collect what is owed so that we can address our residents’ priorities – public safety, creating new jobs, fixing our streets and providing our kids with enhanced recreational options. While we believe the vast majority of our businesses are good actors, we recognize the need to enhance the tools that we have available to bring more businesses into compliance.”
Since taking office in May 2010, the Landrieu administration has expanded the City’s budget for both internal and external auditors, increased areas of partnership with the Louisiana Department of Revenue and implemented a new revenue collection system, City reps said.
In partnership with City Council President Stacy Head, the Landrieu administration has conducted a review of the administration's revenue systems, including enforcement and audit selection processes relative to alcohol beverage outlets (ABOs). The City worked with financial and investment advisors at the PFM Group Financial & Investment Advisors to help conduct research and look for best practices across the country, develop written guidelines for general audit selection, develop written guidelines for audit selection of ABOs, and develop recommendations to increase sales tax compliance in New Orleans even further.
City Council President Stacy Head said, “These ordinances are the result of a joint partnership between my office, the Landrieu administration, and industry stakeholders to strengthen the city’s ability to collect sales taxes. I appreciate the work of all stakeholders, including the Louisiana Restaurant Association, the Business Council of New Orleans and the River Region, the French Quarter Business League, the Beer League, and others to provide input and identify solutions that will make government more effective. The city benefits when everyone pays their fair share.”
District B Councilmember LaToya Cantrell said, "The first step in raising revenue should always be ensuring that our current taxes are paying paid. These ordinances will help to bolster our enforcement of current sales tax law."
The PFM Group researched six different state, parish and city entities across the country looking for best practices to improve sales tax collection, City reps said. The Group’s report includes a summary of national best practices, an overview of the City’s current internal process and a set of recommendations to strengthen the systems the City has in place and its overall performance.
New Laws to Improve Compliance
This first ordinance requires ABOs to submit a monthly breakdown of all sales for the calendar year preceding an ABO's renewal application. This information is provided currently with the State ABO renewal application.
This ordinance increases the tools the City’s team has to ensure people are paying their fair shares of taxes. During the City’s collaboration with local ABOs, this provision was specifically recommended.
This ordinance requires wholesalers to submit annual summary of sales data.
Penalties for non-compliance will be $100 per day for the first 90 days, $200 per day for each day between 91-180 days, and $500 per day after 181 days.
New Laws to Streamline Audits
This second ordinance establishes requirements of reexamining and investigating the books, accounts and records of businesses operating in the City, including ABOs.
This provision establishes penalties for subpoenaed people who fail to respond to the City’s review request.
Penalties for non-compliance will be $100 per day for the first 90 days, $200 per day for each day between 91-180 days, and $500 per day after 181 days.
The third ordinance strengthens penalties for dealers that fail to maintain sufficient records critical to the audit process. City law requires dealers maintain at least three years of records to effectively determine the correct amount of taxes they owe the City.
Penalties for non-compliance will be assessed at $100 per day the dealer fails to provide the required data.
The City is exploring adding more auditors and field agents in the 2017 budget.
These ordinances are supported by the Business Council, Louisiana Restaurant Association, and the French Quarter Business League.
