NEW ORLEANS (WVUE) - Mayor Latoya Cantrell’s administration is increasing city government efforts to crack down on businesses ignoring their tax obligations.
"The welcome mat is always out, and they’re doing a great job of it, and we just need them to follow the rules,” said City Chief Administrative Officer Gilbert Montano.
He said City Hall must do everything possible to make sure it is not leaving tax revenues on the table.
"What we're essentially enforcing is laws and rules that are already on the books. It was one of those dynamics where businesses need to be paying their fair share of taxes,” Montano said.
City Hall’s strategy includes hiring more field auditors.
"We're hoping to establish a new revenue stream of about $1.3, $1.2 million dollars this year just by mere compliance…Similar to any tax collection agency, the way the IRS works it's through an audit. Where are your revenues, where are your expenditures, what are your sales?" stated Montano.
He said the vast majority of businesses are following the rules.
"It’s approximately about 10% of our businesses that we’re actively pursuing to engage in the timely collection of sales taxes. As far as the cash-based businesses this is a city of festivals, parades and events, so we always will have our field agents out accordingly to ensure compliance,” said Montano.
But a group representing some local businesses fears the good will end up suffering for the bad.
"No one in our group wants to not pay their taxes, everybody in our group wants to follow the law, does things the right way,” said Alex Fein, President of the French Quarter Business League.
Fein said past experience leaves them concerned.
"If there are specific businesses that are not following the rules properly, they could focus on them and leave us alone. That would be great, but unfortunately that’s not what happens. Whenever these sorts of things come out of city hall several of the members of our group get their doors knocked on very soon after, and you know, asking for whatever they tend to be looking for,” Fein said.
Montano said collecting owed tax dollars is beneficial to the entire city.
"Ensuring their compliance is something that’s going to be vital to making sure we have the revenue needed to start addressing our quality basic services, everything from infrastructure to public safety,” Montano said.
Fein said French Quarter businesses have previously stepped up to boost security in the area.
"We essentially taxed ourselves to put more security on Bourbon Street,” said Fein.
The city says there are financial penalties for delinquent businesses.
"It’s about 5-percent per month. Once you’re in delinquent status...we’ll continue to actively, aggressively pursue those collections, as well,” said Montano.
He said the effort to collect more taxes is not designed to discourage businesses.
"The City of New Orleans is serious about people doing business here, we encourage people doing business here, but it has to be in a manner in which it’s fair to all residents that are utilizing the services,” said Montano.
The city can go to court to have businesses that do not pay taxes shuttered, but Montano said that would only happen as a last resort.