Council debates meals tax collection strategy

STRASBURG – Town Council debated adopting a new policy on collecting meals taxes from restaurants at its meeting Tuesday.

The council also debated when – and if – it would go about filing misdemeanor or felony charges against the businesses that fail to turn over the tax money.

The meals tax is a 6 percent trust tax between customers and the town. This means when customers pay the tax at the point of sale, businesses hold the tax in a trust before they report it and pay the town each month.

Lately, the town has run into a problem of businesses failing to file their taxes or falling behind. The owner of the Old Mill Grill, Abraham Agosto, is facing criminal charges from the town and owes more than $10,000 in taxes, penalties and interest.

At the meeting, Town Manager Ryan Spitzer pitched a draft of a policy for how the town can collect. In the draft, when businesses fall one month behind, the town contacts the proprietor in person to alert him to the problem. At two months behind, a police officer would deliver a letter informing the owner of the delinquent tax and appropriate filing, and warn of an impending criminal charge. At three months behind, the town and commonwealth attorney would file either misdemeanor or felony charges in General District Court.

Most councilmembers said they’re in favor of the new policy because not paying the meals tax is a form of stealing from customers, and the town being lax on collection is unfair to businesses that pay on time.

However, Councilman Seth Newman said Strasburg’s restaurant economy is tepid enough, and passing a policy that lets the town press felony charges on restaurants could scare off business and create bad public relations.

“I’m not sure when you talk about charging people with misdemeanors and felonies, that we want to be the council behind that,” he said.

On the contrary, both Councilmen Scott Terndrup and John “Red” Hall Jr. said not paying the tax is more than just stiffing the government, but it’s akin to stealing from taxpayers – and the town should prosecute accordingly.

“This is not a business tax, this is a consumer tax. It doesn’t cost the business a dime,” Terndrup said “… It is not a tax on business like an income tax.”

“They are collecting taxes and not turning them in,” Hall said. “They are taking customers’ money and sticking it in their pocket as if it’s their money.”

Council left the issue at an impasse to be revisited in an upcoming work session. At the moment, it is unclear when it will vote on the new policy.

According to information provided by Town Finance Director Dottie Mullins, three businesses, alongside the Old Mill Grill, are each behind two months on filing their meals taxes.

Contact staff writer Jake Zuckerman at 540-465-5137 ext. 152, or jzuckerman@nvdaily.com.