Richmond might be making significant moves to correct the meals tax fiasco. In addition to lowering the charge, it has announced that it will freeze interest and penalties on all delinquent meal tax balances while it reviews large, delinquent local restaurant accounts.
The action was taken at the behest of restaurant owners who say they have been unjustly socked with late fees and interest that they claim they have yet to receive notifications about, as well as other restaurant owners who have been trying to address this issue for years. Finally, they are gaining traction, thanks partly to the change in mayors last year and the fact that Stoney is now in his final year and running for governor.
Effective immediately, bars and restaurants with outstanding balances will no longer incur interest and fees. At the same time, they are being reviewed, and the city says it will directly inform owners of restaurants and bars that are being reviewed. The city hopes to finish the review by July 1.
Notably, the owners of restaurants do not need to trigger the review process – the chief advertising and procurement officer, Lincoln Saunders, has emphasized that they do not need to do anything at all – but potential review applicants should email with any questions they might have about their accounts.
And to go along with the account cleaning, the city is stepping up its roll-out of a new web-based meal taxes system, RVAPay. This system will allow restaurant owners to pay their meal taxes and give users better access to their account information. It was expected that the system upgrade would have to wait until next year for introduction, but now city officials believe it could be online for restaurant use by the end of this year, if not sooner. Among its changes, RVAPay will allow users to log in to view their account details, balance, and payment history, which they cannot do now.
The urgency reflects how dire things have gotten in Richmond’s restaurant industry. This onslaught of pending collections began in late 2021, with onesie-hotel reporting that more than 45 percent of restaurants in the city were marked as late by the end of 2022. It’s hard to know exactly how many restaurants this has impacted, but last spring, a city council member estimated that the city was reviewing more than 200 cases.
Beyond the immediate operational challenges for restaurants, the meals tax represents a crucial revenue stream for the city, ranking as the third-highest grossing tax behind real estate and personal property taxes. For fiscal year 2022, meal tax revenue contributed nearly $46 million to the city budget, underscoring the financial significance of this issue.
As Richmond navigates the complexities of addressing the meals tax debacle, stakeholders across the city are closely monitoring developments, hopeful for a swift resolution that ensures fairness and transparency for all parties involved.
Source: Karri Peifer, Axios February 28, 2024
