County finds drink tax payments rife with errors
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The initial payments from Allegheny County's new 10 percent drink tax are due on Monday, and so far, county Treasurer John Weinstein says the early returns show significant errors, including badly filled out forms and wrong calculations.
With about $750,000 in drink tax revenues received from about 500 liquor license holders as of yesterday, Mr. Weinstein said that his office is seeing a 25 to 30 percent error rate in the returns. The taxes are paid monthly and are due on the 25th of the succeeding month.
"A lot of [the tax forms] are coming in filled out wrong. On some of them, it's a matter of not putting the right numbers in the right boxes, and others are having a hard time calculating the tax because they haven't properly itemized their food and alcohol sales," Mr. Weinstein said.
It is too early to tell whether all of this month's returns will be characterized by such errors, he added, "but it is clear that some people either didn't read or understand all the [drink tax] regulations."
Mr. Weinstein released guidelines in December for the new drink tax, which was approved within the county's budget last year and was created to help fund the county's $30 million subsidy of the Port Authority.
The initial payment of the $2-a-day tax on car rentals, which was approved together with the drink tax -- and was due on Feb. 15 -- yielded $250,000 in revenue, with a 99 percent compliance rate from 148 vehicle rental businesses in the county, Mr. Weinstein said.
"I am very pleased with the car rental tax and how the industry responded," he said. "We barely had any problems with how those returns came in especially because many of them were done at the corporate level."
With regard to the drink tax, however, about 500 of the 2,200 eligible liquor license holders had remitted their drink tax payment as of yesterday, but Mr. Weinstein said it is premature to estimate how many people will or intend to comply with the law, even though there are marked errors in the filings.
Furthermore, he added, it is too early to forecast how much revenue the county will see from the drink tax this month or the next couple of months.
"We still have up to the close of business on Monday to see how we do with compliance, but next week is when we will start the enforcement and compliance aspect," he said.
According to the Pennsylvania Liquor Control Board, Allegheny County has 1,902 active liquor licenses including restaurants, bars and taverns, hotels, airport restaurants and club licenses, which are affected by the drink tax.
But Mr. Weinstein sent drink tax collection forms to 2,200 license holders because active licenses do 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 PLCB, where it is held in safekeeping. When the business is ready to reopen, it can request a return of the license.
"Even if you don't have an active license, we expect you to file a return with us, and we will be checking," he said.
In releasing the drink tax guidelines in December, Mr. Weinstein stressed that under law, it is up to liquor license holders to collect the tax on all sales of alcoholic beverages, including six-pack sales, mixed drinks, wine and beer (opened or unopened).
Starting next week, Mr. Weinstein said: "We will be asking everybody who didn't send in their tax to tell us why. What happened? Explain why you couldn't make the payment."
According to the law, non-compliant restaurateurs and bar owners will be fined $300 for the first violation and an additional $300 or imprisonment of not more than 90 days for repeated violations.
Joseph DiSalvo, owner of DiSalvo's Station Restaurant in Latrobe, and chairman of the board of the Pennsylvania Restaurant Association, said that his colleagues in Allegheny County have all committed to complying with the tax, even as they continue to oppose it.
"We're looking at working with [Mr. Onorato] and the county to do away with this tax," he said. "I haven't yet heard from our members about problems with paying the tax, but we will have a better sense after Monday."
Kevin Joyce, proprietor of The Carlton restaurant, former chairman of the Pennsylvania Restaurant Association and a strong opponent of the drink tax said, "it was not hard to calculate the tax," when he submitted his payment yesterday.
But in adding up what he owed the state and the county in taxes yesterday, Mr. Joyce said: " There's no question [this drink tax] is affecting our sales, and our bottom line."
"[The county] is just making business difficult," he said. "It strengthens my resolve to overturn the drink tax."
First Published February 23, 2008 12:00 am