Commissioner of Revenue and Navy Reach Unprecedented Understanding
Revenue Source Confirmed for Cash-Strapped City
Commissioner Discovers Private Contractors Failed to Pay Local Taxes
A new Letter of Understanding between Commissioner of Revenue Sharon M. McDonald and the Navy confirms the city’s right to tax private contractors and companies conducting business on the Norfolk Naval Base. McDonald made the announcement today, August 25. The Letter of Understanding also establishes an enforcement process that insures the prosecution of delinquent taxpayers.
The Letter of Understanding was reached following a meeting and series of discussions between Commissioner McDonald and Rear Admiral Mark Boensel, the Commander of the US Navy Region, Mid-Atlantic. The initial meeting with Rear Admiral Boensel on June 8 was triggered by McDonald’s discovery of a 26 year-old Letter of Understanding between the city and the Navy. Under the agreement dated August 12, 1985, the city agreed to provide child protective services for the Navy at the Sewells Point complex. In return, the Navy agreed to provide a list to the Commissioner of Revenue of all private contractors conducting business at Sewells Point. When she read the letter, McDonald immediately realized that she may have found the key to a previously untapped source of tax revenue for the financially challenged city. At this point, some background information might be beneficial. For a succession of Commissioners of Revenue, an accurate list of private contractors working on the Naval Base was the elusive “pot of gold at the end of the rainbow.” Without that list, it was practically impossible for the city to tax those companies. In addition, the necessary but severe access restrictions to the base prevented Commissioner of Revenue employees from touring the military complex to record the names of the private companies providing services and supplies to the military. And, although the private contractors signed federal documents that stipulated that they must pay all local taxes as part of the agreement with the federal government, many of the businesses simply ignored the federal law or they claimed the city did not have the authority to levy taxes on work being performed on a military facility.
Two years ago, a series of websites were established that identify the private businesses conducting work on military installations throughout the United States. Based on those web sites, McDonald’s staff identified 59 companies that worked or were working on the Norfolk Naval Base between 2005 and 2010 PAGE 2 DATELINE: NORFOLK SUMMER 2011 that never paid local taxes. It’s impossible to know how many contractors avoided paying local taxes prior to the year 2005 and the potential loss to the city is impossible to calculate. “You finally caught me,” a contractor said to one of McDonald’s auditors. McDonald immediately assessed the 59 contractors, which led to the recovery of approximately $2 million. The accuracy of the list of contractors was at the heart of Commissioner McDonald’s discussions with Admiral Boensel. The Letter of Understanding, drafted by the city attorney’s office and Navy legal counsel, clearly reflects Admiral Boensel’s commitment to a policy that is fair but respects the importance of the integrity of military security.
As a result, the Letter of Understanding has several key components: Along with private contractors, all retail operations on the base, including fast food restaurants and other privately owned businesses, will be identified and taxed. McDonald’s office will also have access to privately owned businesses operating in the Navy Exchange. The Commissioner of Revenue will now levy taxes on the owners of privately owned vessels, with the exception of active duty personnel, that are stored or docked at the Naval Station Marina. The owners of these vessels also questioned the city’s right to impose taxes on personal property on a federal installation. As a result, many of these people never paid personal property taxes and the potential tax loss to the city remains unknown at this time. The Navy will provide the Commissioner of Revenue’s office with a list of boat owner names and registration numbers each February to aid in the preparation of tax notices. “…Norfolk taxpayers, including active duty and retired military personnel, will be the biggest beneficiaries.” Sharon M. McDonald In the event that the private contractors, private businesses or boat owners refuse to pay their taxes, Commissioner of Revenue employees will coordinate with Naval Base security officers to expedite the delivery of court summonses and, if necessary, arrest warrants. The Commissioner’s staff will be allowed to tour the base twice a year to conduct investigations and inspections. The tours will be subject to operational, mission and security requirements. “I want to thank Admiral Boensel and his staff for their high level of cooperation, courtesy, attention to detail and an unwavering commitment to the betterment of our community,” said McDonald. “
As a result of the cooperation offered by Admiral Boensel and his staff, I believe that we have a Letter of Understanding that will serve the city and the Navy for many years to come. Ultimately Norfolk taxpayers, including active duty and retired military personnel, will be the biggest beneficiaries.” The lesson that everyone should learn from this is simple: “Since I was first elected 14 years ago, my mantra has been: everyone has a responsibility to pay his or her fair share of taxes,” said McDonald. “This Letter of Understanding demonstrates that I mean what I say. If you don’t pay your fair share, we’re going to find you. It may take awhile, but we WILL find you.”
Missing Treasure
How would you like to go on a Modern Day Search for Missing Treasure?
You Would? Then Read on my Lads and Lassies.
What if I told you the missing treasure already belonged to you?
Now …I’ve got your interest.
The Commonwealth of Virginia just might owe you some money. The state might have a bank account, uncashed paychecks, life insurance policies, tax refunds stock dividends or safe deposit boxes that you forgot all about.
You can find out once and for all on June 30 from 10 a.m. until 2 p.m. when representatives of the Virginia Department of the Treasury drop anchor on the first floor of the City Hall building.
The visit is being sponsored by Captain Sharon McDonald and the crew of the good ship “Commissioner of Revenue”.
Armed with computers instead of cutlasses and muskets, these modern day buccaneers from the state will guide you on a search for your missing treasure.
1 out of 7 Virginians has unclaimed property. Are you one of them?
It’s time to find out.
So … set your compass for Norfolk City Hall on June 30!!!
For more information, please call 664 7888.
State Income Tax
The State Income Tax Team provides Norfolk residents with year-round assistance in all areas of individual state income tax preparation. The team also files current and prior year tax returns and attempts to resolve Virginia tax issues.
With the elimination of the local offices of the Virginia Department of Taxation and the closing of VITA (Volunteer Income Tax Assistance) locations in late April of every year, the Commissioner of Revenue’s office is the only resource for state tax assistance for Norfolk residents for eight months of the year.
The team attempts to resolve issues with incorrect/incomplete returns by phone or mail to expedite the processing of current year returns. This initiative is another example of how the Commissioner of Revenue’s office endeavors to save Norfolk taxpayers weeks, sometimes months, in the processing of their refunds. This service is not available for returns filed directly with Richmond.
The team provides Norfolk residents with mailing addresses, contact numbers, forms, instruction booklets and assistance with return preparation that is not available locally. This assistance eliminates the long wait time or expense of a long distance call to Richmond.
On many occasions, the team is able to prepare returns or contact Richmond for payment arrangements on behalf of the taxpayer to stop or delay the garnishment process, or provide information on making payment arrangements. These transactions are no longer available from the local Department of Taxation Office.
The Commissioner of Revenue’s office is the only year-round resource for state tax assistance for Norfolk residents.
The Business Revenue Team
The business revenue team consists of a team leader, one supervisor and six employees with a combined 70 years of experience. Each employee is trained in all of the assessment areas.
The business revenue team is responsible for the correct assessment of eleven taxes. The revenue generated by those taxes is placed in the city’s general fund, which City Council uses to finance the operation of city government.
The taxes include:
Business License Tax– In FY’10Norfolkhad 14,155 business license accounts that covered 13 tax categories. Examples of businesses that pay the business license tax are retailers, wholesalers and professionals.
Cigarette Tax– The city has 17 distributors selling cigarette tax stamps.
Business Personal Property– This tax has two classes: furniture and fixtures and machinery and tools.
Examples of assets that are taxed as furniture and fixtures are computers, copiers and office furniture. Examples of machinery and tools include cranes, the assets of bakeries and manufacturers.
Boat Tax– The boat tax has two classes: commercial boats including barges and pleasure boats.
Daily Rental Tax– 47 accounts are divided into short term and long term rentals; 92 days and 270 days respectively.
The Commissioner of Revenue is also responsible for the assessment and collection of fiduciary taxes. These include: meal taxes, lodging taxes, hotel and motel room taxes and admission taxes.
The business revenue team plays a critical role in the generation of tax revenues. For example, the team produced $94.5 million in 2010.
The Tax Compliance Team
The Commissioner of Revenue’s Tax Compliance Team is responsible for enforcing the city’s tax codes and providing assistance to Norfolk business owners. The team includes four investigators, one coordinator and team leader.
The investigators or “Community Ambassadors” are responsible for designated business districts throughout the city. The so called “district approach” allows the community Ambassadors to establish personal relationships with the business owners within that specific district.
The team’s duties include:
The team ensures that businesses in Norfolk are properly licensed and pay all required taxes.
The team provides assistance to the business community on a wide variety of issues.
The team participates with both the city’s Bar Task Force and Convenience Store Task Force to insure that city restaurants and convenience stores are complying with all applicable codes and regulations.
The team serves as the point of contact for the reporting of all violations and the subsequent investigations of local businesses.
The team insures the proper citizen compliance with yard sales and other community-related permits.
And, the team represents the Commissioner of Revenue in court when businesses are being prosecuted for non payment of taxes.
During the past three years, as the result of aggressive delinquent tax collection and discovery of new businesses, the team has generated $7.2 million dollars in new tax revenues for the city.
The Tax Compliance Team plays a major role in assuring that the Commissioner of Revenue’s major objective that every taxpayer, business and business owner pays his or her fair share of taxes is accomplished.
Tax Collectors on the Street
It’s become a ritual. You could set your alarm by it.
Every day, Monday through Friday at 9:05 a.m., Herb Barbour climbs behind the wheel of a late model, blue car, checks his paperwork, turns the ignition key and begins his daily journey through the city.
Herb, a 28-year veteran of the Commissioner of Revenue’s Office, is looking for people who, for one reason or another, have failed to pay their taxes. But … if you think Herb Barbour is the reincarnation of the nasty, despicable tax collectors made famous in countless books, movies and TV shows … guess again. Herb Barbour is a kind, caring man who does his job with the right touch of courtesy, compassion and professionalism. “I rely on what I call the two P’s. Patience and personality’, Barbour said. “You can get a lot more with honey than you can with vinegar”.
Barbour is a member of the Commissioner of Revenue’s tax compliance team – six men and women who are charged with the responsibility of convincing delinquent taxpayers, mostly businesses and restaurants, that paying taxes is the American Way– like Mom, Apple Pie and Baseball. Taxes are the price of doing business in the city.
The team was established almost 14 years ago when Sharon McDonald became the first woman to be elected to the post of Commissioner of Revenue. In fact, she was the first woman elected to a constitutional office in the history of the city. ”I decided that the office had to become more aggressive in pursing delinquent taxpayers”, McDonald said. “It’s critical that everyone pays their fair share”.
In 2009, the tax compliance team generated almost $3 million dollars in tax revenue: $3 million dollars that was added to an annual budget that was already stretched by an economy that refuses to loosen its vice-like grip on the city, state and nation.
Each April, the team is handed a list of delinquent taxpayers. It’s up to the team members to follow up on each and every name. Last year’s 2010 list contained 1300 names. In a relatively short period of time … about three months …. that list gets whittled down to 800 names. “The tax compliance team plays a critical role in the operation of this office”, McDonald said. “Without these men and women, the city would lose millions of dollars each year – money that can be used for schools, public safety, libraries and recreation centers”.
During his years as a tax compliance officer, Herb Barbour says he’s only encountered one belligerent individual who required a quick call to the police. “The large majority of the people that I come in contact are friendly,” Barbour says. “They want to pay their taxes. We just have to remind them to pay”.
Well, of course you do! Then … Norfolk Commissioner of Revenue Sharon McDonald has a deal for you. Drive, push or tow that old junker of yours to Harbor Park on Wednesday, May 25 from 10 a.m. until 2 p.m. and you just might save money on your car tax. Yes, you heard me right. YOU JUST MIGHT SAVE MONEY! For one day only, property tax specialists from the Commissioner of Revenue’s Office will thoroughly inspect your car and then determine if you deserve a reduced tax on your car. And the whole process takes just a matter of minutes. The bottom line is this: If your car is in pretty bad shape … you know high mileage, dings, scrapes and dents … the odds are that your tax is going to be reduced. Now … we wouldn’t recommend that you take a sledge hammer to your car the day before the event. Just bring it in as is. AND, PLEASE … NO NEW CARS OR BUSINESS VEHICLES. This one day, four-hour event will take place in the Harbor Park parking lot in front of Hits n’ the Park Restaurant. Don’t miss it! Look for the signs on Union Street and Park Avenue. How can you pass up a deal like this? For additional information, call Charlie Hartig at 646 0124. Also, go to http://norfolk.gov/revenue/release.aspx?ArticleID=18 for additional information.
