Property Audits Coming—

Record Tax Collection Reported

By John Voket

The two adjoining rooms at the end of the hall have been buzzing, but virtually every town resident stands to benefit from all the activity. The assessors and tax collectors offices, located in the far corner of Edmond Town Hall, have been extremely busy in recent weeks and will continue to work generating revenues to help offset taxpayers’ burdens.

Tax Collector Carol Mahoney reported this week her office has posted a 99.06 collection percentage for the fiscal year that ended June 30, 2006. This rate surpasses any previous collection, according to both Ms Mahoney and First Selectman Herb Rosenthal, who announced the milestone at the last Board of Selectmen’s meeting.

Town Finance Director Ben Spragg said Wednesday that the collections in excess of an amount budgeted for the annual fiscal cycle added an additional $700,000 to town coffers, money that will be combined with other surpluses to total about $2.5 million in taxpayer relief in the upcoming budget cycle.

Because of a Town Charter mandate, all surpluses reported on both the municipal and education sides of the town budget must be turned back to taxpayers, meaning it is washed against increases in the subsequent budget cycle.

Ms Mahoney credits the professionalism of her office staff for outpacing the former tax collections record of about 98.8 percent.

“Our tax office employees worked especially hard this year making phone calls on outstanding accounts, doing follow-ups and negotiating payment plans,” Ms Mahoney said. “It appears that we are still enjoying a good local economy as well — people are coming out and paying their taxes.”

Ms Mahoney said she will keep her fingers crossed that the trend continues.

“You never know what’s coming up in the next collection year,” she said.

Judging from the steady stream of residents lining up to make their payments Wednesday, with only a few days left before the deadline passes and taxpayers face penalties, it could be another good year for the tax collector’s office.

“Traffic has been heavy,” Ms Mahoney said. It will be mid-August before her staff has determined if collections for the first half of the new tax cycle have surpassed last years’ totals.

She explained that all real estate and taxes for personal property exceeding $1,000 are collected in a split cycle, with the option of taxpayers making half or the entire payments by July 31, 2006, for the last assessment. Motor vehicles are generally collected in a single payment in the first cycle.

The tax collector reminds residents they have until 4:30 pm next Tuesday, August 1, to make or post their payments, or face a penalty of three percent of the principal retroactive back to July 1.

“That means payments must be in our hands, or postmarked at the post office, not by postal meter,” she said. “Residents can avoid waiting in line by dropping payments in the mail this weekend, or using a convenience drop box outside the tax office.”

That drop box will be emptied at 4:30 pm August 1. Any envelopes dropped after that final collection will be posted late, she said.

Assessor Readying Audits

Across the hall, Newtown Assessor Thomas DeNoto is working on developing a program of commercial personal property audits that will begin this year. Mr DeNoto explained that the program, which is required by the state, serves to not only analyze compliance of local businesses but to generate possible additional tax revenue that is not being collected at this time.

The assessor is working with a consulting firm of G&K Associates of Manchester, and is in the preliminary stage of drafting an introductory letter that will go out to all businesses in Newtown informing them of the stepped-up administrative process.

Every year, all businesses are required to file personal property declarations that should list every piece of personal property the business has as part of its operation.

“Most businesses know that furniture, equipment, supplies, and computers must be declared,” Mr DeNoto said. “But in the case of a landscaping business, for instance, the weed whacker, shovels, post hole diggers, and shovels also qualify as personal property and should be noted.”

The assessor said federal law allows his office to examine or analyze the federal tax returns of every business in town to see the items that are filed on depreciation schedules for deductions. If a company is selected for auditing, assessors office personnel will match the federal schedule against the local personal property declaration and will then determine if there are any inconsistencies between the two.

Any business that files for a federal deduction on a qualified item of personal property that fails to file the same item on the local declaration may face additional tax penalties going back as far as three years, if the item has been on the federal schedule that long.

Mr DeNoto is also planning to analyze franchise businesses that may have some items of personal property that are owned by the corporate entity like chain restaurants, gas stations, and other retail operations. He said this practice will be done annually and is not related to the townwide property revaluation that is ramping up.

“This is an evaluation of filing and compliance, which is authorized by state statute,” he said. “We’re not looking for reasons to go after Newtown businesses for more taxes; this practice should be done in every town in Connecticut.”

The assessor said he expects with careful analysis that the revenue generated from the audits will far surpass any tax dollars budgeted for the extra work in his office, as well as by the consulting agency. He expects to audit about a dozen businesses annually out of more than 1,850 businesses filing local declarations.

Mr DeNoto pointed out that while in most cases, the audits will develop cases where additional taxes and penalties might be levied, he already had a case where such an audit resulted in a tax refund to a local business.

“We had a case where a business that was moving filed declarations at each location, then missed the opportunity to rectify that with the Board of Assessment Appeals,” Mr DeNoto said. “After analyzing the paperwork, we determined only one declaration was needed, so we deleted the error and generated a refund.”

He said the practice of annually auditing personal property declarations may also benefit the town when officials seek to maintain or increase the municipal bond rating.

“If we failed to exercise the statute, our [municipal] auditors are obliged to point that out in the town’s annual financial report,” he said. “But if the practice continues to yield positive results, our bonding agency will be able to take that into consideration when weighing bond rating criteria.”

Any business owners that may want to amend their personal property declaration can pick up a declaration form in the assessor’s office during regular business hours. For more information, call 270-4240.