$1.7M sales tax settlement is a record in St. Mary Parish
MORGAN CITY, La.-- St. Mary Parish collected nearly $5.6 million dollars in July in sales and use tax, more than 30 percent of which was collected from the largest parish audit settlement ever, according to Jeffery LaGrange, parish Sales and Use Department director.
The parish collected $1,743,898 at the conclusion of an audit in July, LaGrange said.
The settlement included $400,000 in interest with penalties being waived because of the company’s cooperation, Lagrange said.
“This was an extraordinary occurrence,” LaGrange said.
The parish sales and use tax department has two employee auditors who handle compliance audits and it also utilizes contract auditing firms that specialize in tax audits. The auditors investigate cases that appear to be out of the norm with their returns, something that raises a red flag, LaGrange said.
As set by statute, an audit covers three years plus the current year and the name of audited companies cannot be revealed because of privacy issues, he said.
Fraud or tax evasion is not the reason for the audit most of the time, LaGrange said.
“We try to teach companies how to be compliant and on how to do a better job at determining what is taxable and what is not,” he said.
Last year, 37 parish audits recovered $1,323,000 in sales and use taxes, which was 3.18 percent of the $41.6 million of tax collected for the year. That averages $35,756 per audit. Through the first half of this year, which excludes the record July audit, the parish has collected $350,000 in 11 audits which is 1.64 percent of the $21.3 million the parish has collected in the first six months. That averages $31,818 per audit.
A second audit concluded in July collected about $45,177.
While the audits uncover hundreds of thousands of dollars in revenue for the parish, more are not done for a combination of reason, LaGrange explains.
First, audits are done when there is a reason to suspect a problem, second the department is limited by resources available to it and third, there is a desire not to be unnecessarily onerous to businesses.
“You don’t want to be a burden to businesses or to be on a witch hunt for tax dollars,” Lagrange said.
July’s collection of $5,594,000 marks the fourth consecutive month of increased sales and use tax revenue collection, which means that more business is being done and more purchases are being made in the parish.
The 4.3 percent increase during the first half of the year, triples last year’s 1.4 percent rate of tax growth during the same period. When July’s numbers are added to the mix, the parish tax collection soars $2.3 million higher than the same seven-month period in 2012; an increase of 9.4 percent over last year.
“We budgeted for a 3 percent growth and we are well on our way to reaching and exceeding that growth,” Lagrange said. “We have slow, steady growth, which is what I prefer to see over some type of a boom.”
Hotel occupancy tax figures continue a general climb upward. While the month-to-month numbers go up and down, there has been more than a 50 percent increase in the last 18 months.
In July the parish collected $60,301.20 from a 4 percent hotel occupancy tax. In January 2012, collections were below $40,000. Year-to-date tax collection from hotels of over $400,000 indicates about an $18 million annual hotel industry in the parish.
The tax revenue collection shows its strongest growth in the industrial and oil and gas classification where there is a 4 percent growth. Automobile tax remittances grew 1 percent.
Strong automobile sales are a good economic sign because they are big ticket purchases, Lagrange said.
Building materials were down 1 percent, which reflects a housing market that appears to have slowed down in the parish, Lagrange said.
The tax revenues are distributed to the five municipalities throughout the parish along with the parish government, school board and sheriff’s office.