HomeMy WebLinkAboutCOW 2024-06-24 Item 4C - Report - Business and Occupation Tax quarterly reportITEM INFORMATION
STAFF SPONSOR: ADAM SCHIERENBECK ORIGINAL AGENDA DATE: 6/24/24
AGENDA ITEM TITLE Quarterly B&O Tax Report
CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other
Mtg Date 6/24/24 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date
SPONSOR Council Mayor Admin Svcs DCD Finance Fire P&R Police PW
SPONSOR’S
SUMMARY A quarterly report is being provided to the city council in accordance with TMC 3.27.170(B)
on public safety funding associated with the Business and Occupation Tax.
REVIEWED BY Trans&Infrastructure Svcs Community Svcs/Safety Finance & Governance Planning & Community Dev.
LTAC Arts Comm. Parks Comm. Planning Comm.
DATE: COMMITTEE CHAIR:
RECOMMENDATIONS:
SPONSOR/ADMIN. Finance Department
COMMITTEE
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$ $ $
Fund Source:
Comments:
MTG. DATE RECORD OF COUNCIL ACTION
6/24/24
MTG. DATE ATTACHMENTS
6/24/24 Informational Memorandum dated 6/17/24
COUNCIL AGENDA SYNOPSIS
----------------------------------Initials --------------------------------- ITEM NO.
Meeting Date Prepared by Mayor’s review Council review
6/24/24 AJS 4.C
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TO: Committee of the Whole FROM: Tony Cullerton, Interim Finance Director BY: Adam Schierenbeck, Senior Fiscal Coordinator CC: Mayor McLeod
DATE: June 17, 2024
SUBJECT: Quarterly B&O Tax Report ISSUE
The Finance Department is hereby providing a quarterly report to the city council on public safety funding associated with the Business and Occupation Tax. BACKGROUND On November 28, 2022, the City Council passed Ordinance No. 2689, establishing a B&O tax on business activities within the City. The tax was implemented to fund public safety positions with the Police Department, with revenues being allocated to the City’s general fund. At the time, the annual amount of revenue projected for B&O tax was $3 million based on estimates. Ordinance No. 2689 requires the Finance Director to provide a quarterly report to City Council on public safety funding associated with the B&O tax, as codified in TMC 3.27.170(B). DISCUSSION The total B&O tax revenue collected as of June 12, 2024 is $336,096.20. This amount was paid
by 400 businesses in aggregate for the Quarter 1, 2024 reporting period. A total of 553 businesses are assigned to a quarterly filing frequency. Thus, the compliance rate
for quarterly filers is 72 percent. This increased from a 65 percent compliance rate after the Tax Division mailed delinquent notices to businesses that had not filed a return.
Tax Division staff continue to work on compliance efforts to collect any remaining unfiled quarterly returns and to identify additional unlicensed businesses which may owe B&O tax. A total of 67 unlicensed businesses have been contacted regarding their need to obtain a license, and thereby register for the B&O tax, with a compliance rate of 30 percent. The aforementioned information is based on data available as of June 12, 2024. Filing Frequency 553 businesses are assigned to a quarterly B&O tax filing frequency. An additional 1,239 businesses are assigned to file returns annually. Annual filing is assigned to businesses with an anticipated annual B&O tax liability ranging from $0 to a maximum of $1,275.
Much of the revenue associated with Annual 2024 B&O tax returns may be recognized in the 2025 fiscal year as a result of the April 30, 2025 annual filing due date.
FINANCIAL IMPACT 75
Initial B&O tax budget estimates were based on limited information that was available to the City at the time. Based on actual returns filed for Quarter 1, 2024, the annual B&O tax revenue is
expected to be $2.434 million, resulting in a $566,000 difference compared to original estimates. This revised estimate assumes a 100 percent compliance rate and is based on projections using the limited business income information that is available. Of the $2.434 million annual estimated B&O tax revenue, $434,000 is anticipated to be received from annual filers in the 2025 fiscal year, thus bringing the 2024 revenue estimate to $2 million. RECOMMENDATION n/a ATTACHMENTS
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