Finance Committee Agenda and Packet 2011 08 22

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COUNCIL COMMUNICATION TO: MAYOR AND CITY COUNCIL FROM: MALCOLM FLEMING, CITY MANAGER DATE: AUGUST 22, 2011 SUBJECT: DISCUSSION/DIRECTION ON SALES/USE TAX LICENSING AND BUSINESS REGISTRATION ORIGINATING DEPARTMENT: CMO/FINANCE SUMMARY: At the December 2010 Finance Committee Meeting, Finance staff discussed with the Committee fees and forms for the sales and use tax license as well as business registration. The Committee expressed concerns over the requirement for non-retail establishments to be required to remit use tax returns and to obtain a sales/use tax license. The Committee instructed staff to perform an internal review of the current City sales tax license and business registration processes. Based on that review, City staff is seeking policy direction on the fee amount. Would Finance Committee prefer to have a $25 fee for a sales/use tax license and a $25 fee for a business registration? One fee for both?The one fee is cheaper for local retail businesses. A concern staff has is that somehow by not having a fee; it devalues the business registration and thus is more likely not to be completed. With cost/dollars often comes legitimacy. The City could also charge $40, $25 for the sales/use tax license and $15 for the business registration, thus, placing some monetary value on the business registration. The other issue discussed at Finance Committee was the form for the sales/use tax license and the business registration. Staff has attempted to streamline the form and have the request for business registration on the same form as the sales/use tax license. Staff will have some nd copies for your review at the August 22 Finance Committee Meeting. Lastly, staff review has taken some time as there has been significant consideration and discussion about further review and regulation of the business registration process, with the potential to consider a full-fledged business license implementation. The current business registration process is limited to those businesses located in the City, with an annual renewal. Compliance and emphasis is placed on the collection of sales tax, rather than collection of information about business operations. The City requires businesses to complete a registration form, but it is only reviewed for compliance (land use consistent with zoning) by the Planning Department. This information is also compiled and used by the Economic Development Director to collect information about local businesses. However, the limited capability of the City’s financial management system, ADG, makes it difficult to collect or analyze detailed information. No paper registration form or license is produced for registration. SUBJECT AGENDA ITEM DISCUSSION/DIRECTION ON SALES/USE TAX LICENSING AND BUSINESS REGISTRATION ç