ROSWELL, Ga. — Roswell could soon make it easier for all 4,600 businesses in town to renew their license each year.
City officials discussed the change at an Oct. 13 Administration, Finance and Recreation and Parks Committee meeting.
Roswell Finance Director Ryan Luckett proposed revamping the occupation tax renewal process by eliminating revenue projections for the upcoming year.
It was the second time in two weeks City Council members addressed the occupation tax.
During a Sept. 29 council work session, city leaders discussed the prospect of shifting to a new IRS profitability table, a move that could have more than doubled some businesses' tax rates in 2021.
That proposition was met with disapproval from at least three council members, who spurned the notion of a tax increase on local businesses during the COVID-19 pandemic. Other council members, however, suggested the city needed to switch to the correct profitability table to establish consistency and avoid a repeat of last year’s $600,000 deficit in projected commercial tax revenue.
The matter seemed to be at a stalemate when council members couldn't reach a consensus on how to move forward at the end of the work session. Mayor Lori Henry called for officials to discuss the tax tables again during the Oct. 13 committee meeting.
But the issue wasn't on the table. Instead, they talked about removing red tape from the city's business license formula.
Luckett focused on streamlining the annual process by which Roswell business owners renew their license. Under the current model, owners must provide the city actual gross receipts documenting their revenue from the previous year. They must also give an estimated revenue marker for the current year. The Business Registration office then compares the actual receipts from the prior year to the business' projections for that year. That helps the office calculate "true-up" adjustments to determine if the business owes the city money, should be credited for overpaying or paid the correct amount for the year.
Luckett recommended eliminating the estimations from the process and basing each business' occupation tax only on its actual gross receipts from the previous year. That, he told council members, would simplify license renewals for business owners and make staff more efficient.
As she did at last month's work session, Henry suggested making 2021 occupation taxes "revenue neutral," a move that would cap assessments and ensure businesses aren't hit with an increase in commercial taxes next year.
"Basically we are easing on into this, and we are conscientious about not causing our businesses any additional harm," Henry said. "We recognize COVID and we recognize what's going on here and we're switching the tables."
Other council members focused on the application process.
They seemed to support Luckett's idea, but it was clear there were still some kinks to work out. The biggest sticking point was how to treat reorganizing brand new businesses when they apply for licensing with no gross receipts from the previous year.
Luckett said the city would still rely on estimates from those businesses for their first year. But his proposal did not offer room for penalties or adjustments for incorrect first-year projections.
That didn't sit well with several council members who sought adjustments for new businesses that miss the mark.
"[For] the ones that should get a refund, is there a way that we can look at giving them that credit back?” Councilwoman Christine Hall asked. "Then on the other side, if people are too low, can we bill them for that amount?"
Luckett cautioned that tweak might nullify the gains made from streamlining the system.
"We would be introducing more complication into the process because those new businesses basically would be completing a different renewal than all the other businesses would be in that upcoming year," he said.
Yet, Henry and council members Mike Palermo and Marie Wilsey still pushed for adjustments to be incorporated into the system for new businesses.
"Am I missing something Mr. Luckett, because I feel like we would be penalizing a new business," the mayor asked. “They’re going to base their taxes on what they think they’re going to make, but then their next-year taxes are going to be based on the actuals like everyone else.”
Henry said she wants the licensing process to address receipt estimates made by new businesses to hold them accountable for accuracy. She said new businesses would be credited for any overpayments.
Wilsey shared Henry’s concerns that businesses that open mid year could be overtaxed based on their early anticipations. She called for “some kind of roll-up or accountability” and proposed a more uniform “administration fee” for first-year businesses instead. Luckett said that would be a violation of state law because the city would effectively be taxing new businesses differently than existing ones.
The councilwoman later pointed out that the city has a goal of promoting economic development with a posture of business friendliness.
"When we're looking at what this policy is, I think we need to look at it through the lens of attracting businesses," Wilsey said. "Attracting that Maserati dealership or that technology company that’s going to employ 250 people. So I just don't want to make it so complicated and such a burden that it detracts rather than meets the goals that we want it to."
No action was taken on the matter. The council is expected to vote on a resolution confirming a plan that addresses procedures for new businesses while simplifying renewals for existing ones.