Meals tax audit reveals Richmond is losing $1.5 million annually

RICHMOND, Va. (WWBT) - Almost $46 million was brought in through Richmond’s meals tax last fiscal year, but a new audit reveals that total could have been higher.

“Are we getting all the revenues that we are due and back (taxes) and owed (taxes), and that impacts people and our ability to deliver services,” said Stephanie Lynch, Richmond City Councilor.

You pay that meals tax at food establishments, like restaurants and convenience stores.

The audit found more than 450 Richmond businesses had unfiled taxes for at least one month. Of that, almost 60% had unfiled taxes for six months or longer. Only 22% were contacted about the unpaid money.

The problem is two-fold. The department has a lot of unfilled positions.

“The unfilled vacancies that we have in that department are certainly leading to a lack of staff support to help address some of the unfilled businesses,” said Councilor Lynch.

And software and technology needs to be brought into the 21st century.

“For our staff to have to manually calculate or have to go back and manually calculate the meals taxes that they receive from businesses is just onset. It’s not good for our staff,” said Councilor Lynch.

The city is working through the seven recommendations of improvement to bring about change and make sure the tax money is coming in.

You can expect more audits on those taxes we think we’re paying City Hall. Councilor Lynch also wants to make sure another tax in the city isn’t going up in smoke either.

“It would be interesting to see a commiserate study or audit report done to see if we’re collecting all of the taxes that are owed to us from our convenience stores and merchants who are selling the cigarettes,” said Councilor Lynch.

Council increased the cigarette tax twice over the last decade, including a more recent 8-cent smoke tax increase.

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