May 9, 2018
By: Dwayne Page
The City of Smithville will be losing more than $60,000 a year in local option sales tax revenue to the county.
A recent study by a Murfreesboro firm, under contract with the county, found that local sales tax revenue derived by a handful of businesses located near but outside the city limits of Smithville were erroneously being credited to the city instead of the county. That money, which comes to $60,568 for the last 12 months, will be re-directed from the city to the county. All future local sales tax receipts from those businesses will now be credited to the county.
City Administrator Hunter Hendrixson made the mayor and aldermen aware of the finding during Monday night’s monthly city council meeting.
“I got a letter from the Financial and Control Division of the Tennessee Department of Revenue concerning our local sales tax. They sent me a list of businesses and asked if they were inside or outside the incorporated city limits. Every one of those (businesses) they sent me were outside of the city limits. We’ve been collecting local sales taxes from those businesses for a long time. The state went back twelve months filed by the taxpayers of those businesses. The amount of local sales tax credited to the city in error is $60, 568. This amount will be deducted from the City of Smithville and credited to DeKalb County,” said Hendrixson.
The review was authorized by the county commission last October when it entered into a Revenue Enhancement Consulting Agreement with the Barrett Group of Murfreesboro.
During a prior workshop, Donna Barrett of the Barrett Group addressed the county commission to explain the proposal.
Under the agreement, the Barrett Group was to conduct a review to make sure the county is getting all the revenues it is due from various state taxes that local businesses pay including sales tax, Hall income tax, beer and liquor tax, excise tax, etc.
For example, if a municipality within the county is found from this review to be erroneously receiving any tax revenues from businesses outside of the municipality, then the mistake will be corrected and the tax money will be re-directed to the county.
The Barrett Group is to receive 50% of any extra revenues generated to the county from this review only for the first year. After the first year, no further fees will be paid to Barrett. Had the review turned up no mistakes, the county would not have owed Barrett anything.