Many Local Businesses Delinquent In Taxes
The arrest of a Warsaw business owner on Friday has spawned the question: How many other local businesses are continuing to operate in violation of state tax laws?
Chetrice Mosley is a spokeswoman for the Indiana Department of Revenue which, sometime last week, posted a sign on the front door of Helser Carpets (see related story) notifying the public the business has failed to pay state business taxes despite having collected those monies from customers. According to Mosley, the violation is a Class A misdemeanor and can result in the state garnishing wages, levying bank accounts or even holding an auction to sell off property to satisfy the tax debt.
In Indiana, to lawfully conduct business, all retail businesses must operate with a valid registered retail merchant certificate issued by the Indiana Department of Revenue.
Mosley explained that Indiana lawmakers in 2009 voted to publish the list of delinquent businesses online. “At the very least the list of the businesses is so you, as a consumer, can make the decision to not go to those businesses and pay taxes on goods that the business is not paying to the state, and sales tax is state money,” she said. “It’s a tool of empowerment for consumers to see the list.”
Indiana’s sales tax is to be collected from consumers by businesses and then passed directly onto the state. The monies are not for the individual business operations and, said Mosely, “Technically, if a business owes sales taxes and hasn’t contacted the DOR, the retail merchants license is expired. A person cannot operate if they don’t collect sales tax.”
At the same time, Mosley said the responsibility of shutting a business down for non-compliance falls in the hands of the state attorney general’s office.
“It’s unfortunate that we get blamed by the public sometimes for shutting down small businesses, but the reality is that the public doesn’t see that those businesses are not paying taxes,” Mosley offered.
She added, however, that the IDOR makes many efforts to work with business owners prior to filing tax warrants and recalling retail merchant certificates.
In the end, if businesses fail to cooperate with the state, final measures are taken to collect the delinquent taxes. Those measures include filing tax warrants against the business, posting the notices of violation at the offending businesses and, in drastic cases, calling for the sale of the business to satisfy the debt.
Mosley said that, because of the limited manpower, consumers are encouraged to report businesses that are still operating, despite being identified as delinquent in sales tax payments. “There is a fraud section on the website where people can report those businesses,” she explained. “In the end, we want to work with businesses who get behind. All of our correspondence to them is about needing them to contact us so we can work something out. We’re here to help.”
The list of businesses that have had their registered retail merchants licenses expired due to nonpayment of sales taxes, is listed here. Mosley did note, however, that the state-mandated list could include some businesses that have closed but have not informed the Department of Revenue.
“The list goes back many years,” she explained. “Businesses that closed don’t often close with the state. So if someone is out of business, they could still be listed but not owing. Sometimes the principal operators have changed. They just need to update the information with the IDOR.” Businesses that are listed should contact the collections division at 317-232-2165 to either make payment arrangements or correct information on file.
To see the state’s entire collections process, see the link at in.gov/dor.
To see the state’s list of delinquent businesses, click here.
To report a business fraudulently operating with an expired retail merchant’s certificate, visit the IDOR’s online fraud center.