Finance commissioner clarifies sales tax report
SARATOGA SPRINGS, N.Y. » In early August, the New York State Comptroller released a report on local sales tax over the first six months of 2017. In the report the city tax collections were down 5.9 percent, approximately $319,000 yearover-year. The second quarter of 2017, however, was negatively impacted by over $545,000 of prior period adjustments wholly unrelated to the 2017 sales tax. Saratoga Springs Commissioner of Finance Michele Madigan said it was the first time during her time as commissioner that she saw such a massive adjustment, prompting her to phone New York State’s Department of Taxation and Finance.
“She said these are prior year adjustments based on on-going audits and we never know when they’re going to settle and they will only give us so much detail because there’s a lot of privacy information that comes into play with sales tax report,” said Madigan. “They wouldn’t tell me who these companies are that pay sales tax based on the audit had a prior year adjustment, and there were two and they were pretty significant. One dates back to 2015, while the other dates back to last year.”
The Department of Taxation and Finance provided Madigan with a more detailed review of the city’s sales tax calculation, which Madigan shared during last week’s city council meeting.
The report said from June 2016 to May 2017, which is the most recent data available, the city collected $11.9 million from close to 13,000 businesses. The list of salestax-generating companies is fairly top heavy, with 92 businesses generating half the city’s annual total, and the top 20 companies accounting for almost 25 percent. This top 20 represent a diversified pool of industries including hospitality, retail, tech, construction and automotive companies and in total this group was up over 13 percent combined year-overyear. Additionally, of this top 20, 17 were in the top 20 last year.
According to Madigan, the $11.9 million was 4.4 percent greater than the amount received from June 2015 through May 2016.
“We’re actually really up significantly if you ask me, because those adjustments should have omit prior years which, I didn’t really account for statistically, so let’s say we should have gotten $250,000 last year and
maybe $250,000 less the year before that,” said Madigan. “That would drive your 2017 number up, so unless somebody’s paying sales tax inappropriately in 2017...but I have to hope Tax and Finance is on top of that right now and that we’re seeing more accurate numbers as a result of their outstanding audits.”
The Department of Taxation and Finance provides monthly reports to the city on sales tax.
“We could see another one easily. We don’t know. Tax and Finance will not tell us about open pending cases. We could also see something though completely in the reverse direction. As they’re audited different companies that are supposed to pay sales tax. Maybe there’s one paying to the county that should be paying to the city. I don’t know how likely that is,” said Madigan. “I think they do try to be as accurate as they can in how they receive and distribute sales tax.”
The Comptroller office doesn’t specify why a city’s sales tax would be down.
“They’re not saying, ‘oh, what happened here? Oh, they had a prior year adjustment, right?”’ said Madigan. “They’re just saying, ‘you’re down over the last year.”’
Madigan said the sales tax in the city is strong.
“Very positive about the local economy,” Madigan said. “I see no indication that we’re really actually down. Does this hurt? Yeah, it hurts. It’s kind of why you have that rainy day fund, your fund balances your savings account, right, because you need to be prepared for these unexpected sort of hits on your budget. And this is an unexpected hit. You can’t plan for this. We didn’t know there was going to be an audit that sales tax wasn’t attributed accurately, but we are prepared to handle it because we have good, substantial savings.”