Clerks Watch Business Tax Collections Drop with State Takeover

A predicted increase in business taxes has not materialized after the state took over collections from county clerks. The Tennessee Department of Revenue argued it was better equipped to crack down on delinquent businesses. But instead of $21 million in new revenue, collections for 2010 were only slightly higher than the prior year.

From the beginning, big city county clerks like Davidson County’s John Arriola believed it worked well for businesses to register for a license and pay their taxes all in one place – the county clerk’s office.

“We felt like we were already doing a good job, especially in the urban areas where the business taxes are collected.”

A year into the state takeover, Arriola said his office was down a million dollars in revenue. Clerks from Shelby and Knox counties testified to a special legislative committee that they too watched revenues drop instead of pick up.

The state has had to integrate databases of business names and addresses from all 95 counties. Revenue Department spokesman Billy Trout admits it took longer than expected.

“We’ve got our handle on that now. We feel good about it. And the counties and cities from our perspective seem to be pleased most recently especially with the amount of collections they have received.”

Revenues have picked up in recent months. A program that gives amnesty to businesses who voluntarily pay their back taxes has generated $5 million.

Urban county clerks say they’ll give the state another year to prove it can do a better job of business tax collections. If not, they’d like that responsibility back.

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