At the November 2009 Council Retreat, the Sedona City Council directed staff to pursue a variety of projects aimed at improving sales tax collections through educating businesses and clarifying the times when taxes must be collected while improving collections processes.  The following is a summary of these projects with timelines and highlights of the impacts on businesses.

1. Sales tax information cards.  The city partnered with the Sedona Main Street Program and the Sedona Chamber of Commerce to create a double-sided card with tax collection flowcharts to aid in proper collection.  These flowcharts are available online at the city’s and Sedona Main Street’s websites, www.SedonaAZ.gov or www.sedonamainstreet.com.

1. Local audit authority.  On June 8, 2010, the Council authorized hiring a sales tax auditor.  The firm of Albert Holler & Associates is under contract to perform at least 25 sales tax audits from July 1, 2010 through June 30, 2011.  Based on taxpayer information from the Arizona Department of Revenue (ADOR), the auditor compares payments from different categories of taxpayers looking for tax payments falling outside category norms.  Then, the auditor contacts the individual business in question and explores the books of that business to determine if there are taxes due the city or due to the business.  Following that review, the auditor notifies the business and the city of taxes due and the payments are made.

1. Contract with Revenue Discovery Systems (RDS).  Council authorized staff to negotiate a contract with RDS, a third-party sales tax collector to collect current taxes due the city.  This contract is scheduled to come before Council on September 14, 2010 at the regular council meeting.  If it’s accepted at that time, then third-party collections will start on January 1, 2011.

Effective with contract approval, an entire business outreach program will begin to teach businesses (and accounting firms operating on behalf of businesses) how to file city sales taxes with RDS.  The main difference to businesses from current tax payment processing is that the city’s taxes only will go to a different location.  Businesses will still complete their regular Transaction Privilege Tax (TPT) 1 Form and send ADOR the taxes due the state and the county – just as they do today.  If passed, effective January 1, 2011, businesses will also complete a similar form and send city taxes directly to RDS.  To help businesses manage this new process, RDS offers online tax bill payment capabilities with a variety of support both online and via the telephone to assist businesses in making correct tax payments on time.

4.      Business Licensing.  Staff is recommending Council passage of mandatory business licensing to replace the current business registration.  If a business is required to have a Transaction Privilege Tax number per the state statutes, then the business must also purchase a business license under the recommended code changes.  If a business is not required to have a TPT number, then it won’t need a business license either.

The fee will remain the same (as business registration) at $25 for the first business owned by a person or entity in one location plus $5 for each additional business operating out of that identical location and owned by the same person or entity.  The actual business license code recommendations are posted on the city’s website home page under News & Updates, Notice of Business License.  Because of a 60-day posting requirement, the business license code changes will come to Council on October 26, 2010.  If passed at that time, the new business license code will also take effect on January 1, 2011.

Finally, to help answer questions, Frequently Asked Questions (FAQs) are posted on the city’s website under the Business tab on the Economic Planning page.

Should anyone have questions about these projects or interest in having the city present details on these projects to interested groups, please contact Jodie Filardo, Revenue Manager at 928-203-5040 or jfilardo@sedonaaz.gov.