Springfield will pursue the tax payments, and is considering how best to bill and collect without imposing unreasonable burdens.
SPRINGFIELD – The city estimates that a billing error that was undetected for several years has resulted in unbilled, unpaid excise taxes that could total as much as $330,000 from automotive businesses.
The city will now pursue the tax payments, and is considering how best to bill and collect the projected amounts without imposing unreasonable burdens on the businesses, city officials said this week.
The bills had not been sent to automotive dealerships for dealer plates and had not been sent to auto repair shops for repair plates, officials announced Thursday. Under state law, the special plates carry an excise tax of $100 per year.
City Solicitor Edward M. Pikula sent a letter on Thursday to Kelley and Ryan Associates Inc., of Hopedale, the city’s long-time deputy tax collector, seeking “a full accounting and explanation” for the unbilled excise taxes. A company official could not be reached for comment.
Mayor Domenic J. Sarno said he is very concerned by the lapse, and has directed that a further internal review be conducted to ensure that the type of error does not occur again.
The error preceded his administration and occurred during his administration, also during the tenure of the state-imposed Finance Control Board, Sarno said. The cause of the error remains under investigation, officials said.
City Assessor Richard Allen said the city “is working to correct the deficiencies which caused this omission and we intend to proceed cautiously so as not to burden the affected businesses.”
Kelley and Ryan has been the city’s deputy collector since 1998. Its current contract was signed in 2009, and continues until 2012.
A state Department of Revenue official said Friday the city has the power to pursue the bills from past years.
Officials in several other communities in the region said they have successfully billed their automotive businesses.
In Northampton, City Assessor Joan C. Sarafin said the city has been collecting the excise tax on the dealer plates every year. In 2010, that amounted to $11,600 for the city’s coffers.
Sarafin added that the city is also careful to collect excise tax on repair plates, which are used by garages. Those taxes totaled $10,000 last year.
Holyoke also collects the excise taxes on the plate, but the amount collected annually was not immediately available.
In Palmer, excise taxes on dealer plates bring approximately $7,200 a year, according to Treasurer-Collector Paul Nowicki.
Roy Gumlaw, president of Bing’s Automotive on St. James Avenue, said he questions why his single repair plate should even be taxed. The plate is required for liability, but is only used to test drive customers’ cars, he said.
“It’s not right,” Gumlaw said. “You pay excise taxes on personal vehicles. Every customer who comes in here pays excise taxes.”
With various fees and a high property tax rate, “they’re killing the small businessman in Springfield right now,” Gumlaw said.