Since C-VILLE wrote about Albemarle County now retroactively demanding $50 business licenses—for the past five years—from freelancers who didn’t know they were businesses, surprised writers chief among them, we’ve learned that the county expects to bring in over $11.3 million in revenue, which will more than cover the $123,000 cost to hire two auditors.
However, some glitches remain in collecting the $50 business professional occupational license.
Although freelance writer and musician Lynn Pribus grossed $7,467 in 2012, a county auditor insisted her earnings for that year were $700K, and cited the Virginia Department of Taxation’s secure records. And because the county collects on gross receipts for those businesses earning more than $100,000, that means Pribus would owe $4,060. Plus interest and penalties.
“You can ‘verify’ with the Department of Taxation until the cows come home, but I am looking at my copy of my 2012 tax return AS FILED and, believe me, there are no gross receipts of more than $700K,” she wrote in an e-mail to the auditor.
Pribus calls the exercise “time consuming and frustrating,” particularly because she says she called the county when she moved here from California in 2007 to ask if she needed a business license and was told no.
“I was not here in 2007, so I am unable to speak on why you did not need a business license during your visit to our office,” replied the auditor in an e-mail.
Musician Gabe Robey also received a letter from the county that said he may need a business license.
The only problem? Robey lives in the city.
“They said that was a mistake,” says Robey after he called the county finance office.
Some of the recipients of the letters, like Charles Feinegoff, who has been a freelance writer for the past 25 years, were surprised that the county was coming to collect for a license they didn’t know was required.
County finance director Betty Burrell clears up that mystery. “Finance has two full-time business tax auditors who have been working to identify and educate business owners who are not compliant with county business tax laws,” she writes in an e-mail. The notices are part of the auditors’ jobs and follow something called the audit work plan, she explains.
And almost anyone who files a Schedule C on their income tax is susceptible, especially since the county has access to state income tax records.
“I think the county needs to be much better about publicizing the business license and needs to come up with a more rational, coherent and fair fee system,” says Feinegoff.
He questions why the license goes up so spectacularly—to $580—for those making more than $100K, and why they’re taxed on gross rather than net income. He’s also puzzled why the county wants the business professional occupational license paid March 1, but income taxes aren’t due until April 15.
After the initial irritation of having the county insist she made $700,000, Pribus learned state code allows the county to waive the penalties and interest from her late filing.
“It was frustrating and annoying, but if it’s on the books, we have to pay,” she says. “The county needs the money and I don’t want them to raise my property taxes.”
Still, she thinks it’s unfair to tax any business on its gross income. “Even the IRS doesn’t do that,” she says.