Treasurer wrestling with logistics of collecting new levy

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When Allegheny County Council approved the new 10 percent tax on poured alcoholic drinks last week, county Treasurer John Weinstein was a bit unnerved at the prospect of creating a new tax division in three weeks.

"I'm not sure Houdini could do this, but we're going to give it our best shot," Mr. Weinstein said. He is assigned to implement, collect and enforce the tax, which takes effect Jan. 1.

County Council on Tuesday approved the tax, which will be part of a new dedicated funding source for the county's $30 million subsidy of the Port Authority. It will apply to all liquor sales at bars and restaurants, except six-packs of beer.

"We're working on that right now," Mr. Weinstein said of implementing the tax. "We're doing an internal analysis of what we need, but County Council threw this in my lap and there are a few hurdles."

The new tax division will have a staff of at least 12, he said. They will need new computer systems and software, and their goal will be to make the collection "as user-friendly as possible," Mr. Weinstein said.

So far, he has no estimates of the cost of collection, he said, but he plans on modeling the division after the one that collects the hotel room rental tax. In that division, the county spends about $200,000 to collect $20 million of revenue.

But Mr. Weinstein said collection of the alcohol tax is by no means comparable to collection of the hotel tax.

"I have four people who are in charge of collecting [the hotel] tax, but they have to deal with 156 establishments. With alcohol, we're talking about a huge number of liquor licenses," he said.

Allegheny County currently has 1,902 active liquor licenses, according to the Pennsylvania Liquor Control Board. That includes restaurants, bars and taverns, hotels, airport restaurants and club licenses.

Nick Hays, spokesman for the PLCB, said the number of active licenses does not include those held in safekeeping. When a licensed establishment is closed for more than 15 consecutive days, the licensee is required to return the license to the agency, where it is held in safekeeping. When the business is ready to reopen, it can request a return of the license.

Mr. Weinstein said his office is working on the key details of regulations that will be part of the implementation. His plan is "to make all the necessary forms and regulations very accessible," he said.

In addition to posting the regulations at bars and restaurants, he said, they will be on the county's Web site, and liquor license holders will be able to pay the tax online.

In Philadelphia, where a 10 percent alcohol tax was enacted in 1994 to raise revenue for the city's ailing school district, Nancy Kammerdeiner, commissioner of the Philadelphia Department of Revenue, said she wished Mr. Weinstein luck.

Ms. Kammerdeiner, who took over in April 1995, a few months after the alcohol tax went into effect, said, "It took some time for people to come around" after a hard-fought campaign to defeat the tax.

Initially, she said, "not everybody paid. It takes a while for people to comply because it's a learning curve. All these businesses were faced with new tax forms and some establishments had a hard time incorporating them into their accounting."

In the first few years, Philadelphia collected about $20 million. In this fiscal year, it took in about $40 million, Ms. Kammerdeiner said.

Restaurateurs and bar owners in Philadelphia are required to pay the tax monthly, by the 25th day following the month in which the tax is collected. The city's revenue department started a compliance program about a year after the drink tax went into effect, Ms. Kammerdeiner said.

"People adapted to [the tax] very gradually in the first few months. We found some people who owed us and needed to be nudged, but our compliance program also found some liquor license holders that didn't owe us. They had active licenses, but they were occasional users or they no longer had open businesses," she added.

In Philadelphia, restaurateurs and bar owners who don't pay the tax are first notified, and if they don't respond, are referred to the city's law department for prosecution.

Mr. Weinstein said he has not yet worked out the procedures of how to handle noncompliant businesses here. The county's drink tax law provides for a $300 fine and other criminal penalties for nonpayment.

Mr. Weinstein also is working on a monthly schedule of collecting the tax.

He said restaurateurs and bar owners can expect to hear from him soon.

"We might not have figured it all out by Jan. 1, but once that day comes, we will be coming to collect," he said.


Karamagi Rujumba can be reached at krujumba@post-gazette.com or 412-263-1719.


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