Traverse City Record-Eagle

Archive: Wednesday

March 28, 2012

GT board is refusing to pay tax firm

BY BRIAN McGILLIVARY bmcgillivary@record-eagle.com

TRAVERSE CITY — A national tax firm wants $63,000 for discovering more than $300,000 in unpaid business property taxes in Grand Traverse County, but commissioners so far refuse to pay.

The county board hired Tax Management Associates of North Carolina in October 2010 to make sure all of the county's 2,800 listed businesses were paying taxes on furniture, inventory and equipment — known as the personal property tax. The contract called for the county to pay $250 for every business owner Tax Management discovered that either didn't file a personal property tax statement or failed to disclose all its property. The company unearthed more than $7.8 million in unreported business assets.

The county objects to the bill because it gets to keep just $38,000 of the $300,000 in new revenue. Most of the money collected goes to schools, with the balance to other taxing agencies such as Traverse City or the townships.

"The county shouldn't have to pay for any revenue that is going to be paid over to the schools or the city or the townships," said Dean Bott, interim county administrator. "It's supposed to be revenue neutral."

Bott cites two clauses in the contract with Tax Management. The first says the company won't bill for more than the total amount collected. The contract also states the intent is the county does not pay more in fees than it will receive in revenue, or $38,000.

Tax Management did not return calls seeking comment.

Michigan's unique system of property tax collections likely led to the misunderstanding, said Robert Vandermark, county equalization director and a former consultant to Tax Management.

"In a lot of states the county runs the police department, fire department, the school systems, they are the main taxing jurisdiction and collect all of the money," Vandermark said.

The county will eventually recoup its money, Vandermark said.

"Once you get that property on the tax rolls, it will appear on future rolls and there will be future money coming in," he said.

County commissioners were already upset with Tax Management and show no inclination to pay the full $63,000 invoice.

"They are out of their minds," Commissioner Christine Maxbauer said. "If there was a vote I could take back, it was that one — hiring them."

Commissioners were peppered with complaints when Tax Management started contacting businesses. Commissioners alleged the company badgered small operations with few assets to report, and ordered the company to stop contacting businesses in April 2011. But it completed most of the contact work by then.

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