Council Communication

Title:	Appeal of Food & Beverage Tax Penalty to City Council
Dept:	Administration
Date:	June 18, 2002
Submitted By:	Greg Scoles, City Administrator Lee Tuneberg, Finance Director
Reviewed By: ........................	Paul Nolte, City Attorney

Synopsis:	Ron Roth, General Manager of Geppetto's, is appealing the penalty assessed for failure to pay the Food & Beverage Tax for the quarter ending March 31, 2002. The total penalty assessed was 10% of the outstanding balance for a total of $200.
Recommendation:	It is recommended the council hear any evidence, which might support Mr. Roth's claim that the penalty for the quarter ending on March 31 st was in error. If the council concludes the calculation was not in error, then the council should affirm the determination of the Finance Director and order the past due amount paid.
Fiscal Impact:	Currently Geppetto's owes the city over $10,000 in past due Food & Beverage Taxes, penalties and interest for this and other delinquent quarters. Food & Beverage Taxes are to be collected by the restaurant operators then turned over to the city to be distributed between the wastewater fund and the parks and recreation fund. Failure to pay impacts both of these funds. It should be noted that every operator required to collect the Food & Beverage Tax retains five percent of all taxes collected to defray the costs of collections and remittance to the city.
Background:	On April 25th the city received a report from Geppetto's indicating that they owed the city $7,081.20 for the quarter ending March 31st. At that time Geppetto's only paid $5,081.20 and still owed $2,000. Ashland Municipal Code Sec. 4.34.060.A. states: "Any operator who fails to remit any portion of any tax imposed by this chapter within the time required, shall pay a penalty often percent of the amount of the tax, in addition to the amount of the tax." On May 1st the city sent Geppetto's a notice that they owed $2,220, including penalties and interest, per the above mentioned municipal code section. To this date this amount remains unpaid and was subject to an additional 10% on May 25th. On May 9th Geppetto's filed an appeal of the penalties assessed for the quarter ending March 3 1st. No information was submitted that would support a conclusion that the Finance Director erred in the calculation that added the $200 penalty to the amount due for the quarter ending March 31st. In fact the calculation of the tax, penalty and interest was based entirely on the monthly report submitted by Ron Roth, General Manager for Geppetto's. Ashland Municipal Code section 4.34.080 Appeal states: "Any operator aggrieved by a decision of the director with respect to the amount of such tax, interest and penalties, if any, may appeal to the city council by filing a notice of appeal with the City Administrator within 15 days of the serving or mailing of the determination of tax due. The council shall fix a time and place for hearing such appeal, and the City Administrator shall give five days written notice of the time and place of hearing to such operator at the last known place of address. The council shall hear and consider any records and evidence presented bearing upon the director's determination of amount due, and make findings affirming, reversing or modifying the determination. The findings of the council shall be final and conclusive, and shall be served upon the appellant in the manner prescribed above for service and notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice."

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