Is business license working?

By Greg Bird
birdman@tmcvoice.com

In effect for nearly eight months now, is the McCreary County Business License Ordinance doing what it is intended to do?
According to Occupational Tax Office Administrator Stephanie Tucker, the answer appears to be yes. But there is still a lot more that can be done to ensure that the law is enforced fairly and is not just a revenue-generating pseudo-tax on businesses.
The ordinance calls for all businesses operating within the boundaries of McCreary County to purchase an annual license for $20, which is to be displayed prominently. A business found operating without the license is subject to fines if caught.
The ordinance’s main purpose, according to Judge Executive Doug Stephens is to provide a “tool in our toolbox” to give the Occupational Tax Office more information on existing businesses and additional authority to enforce the occupational tax laws already on the books.
When the ordinance went in to effect on July 1, 2017 Tucker reported her office had already issued 335 licenses at that point. Since then an additional 186 have been issued, bringing the total to 521. The licenses have generated $10,550 in fees for the county as well.
But, there are possibly many more businesses that are operating under the radar and without licenses. Tucker stated at the time the ordinance began she had sent out over 800 notices to individuals and businesses from her database comprised of accounts that had paid occupational tax in the past.
Some of those businesses no longer operate in the county or have closed their doors, but Tucker does not have the time nor resources to physically visit in-county addresses, or even out-of-county businesses to verify wether they are active or not, and if so – should they need a license and pay occupational tax.
To actually ensure the Business License ordinance is enforced fairly and equitably, the County needs to take steps to provide the Occupational Tax Office with assistance in that regard.
Tucker admitted in the Fiscal Court meeting last week that she did not know how that aspect of the ordinance was to be handled. According to the ordinance the McCreary County Sheriff’s Department, elected Constables and an agent appointed by the Fiscal Court would be authorized to inspect businesses for compliance with the ordinance and prosecute those who fail to do so.
McCreary County Judge Executive Doug Stephens said Monday he hopes to “get the ball rolling” on posting a position for County Code Enforcer. In addition to being tasked with checking on local businesses to ensure they are complying with the business license ordinance, the individual chosen for the position could also work toward enforcing the garbage ordinance and other county ordinances.

The license works in tandem with the Occupational Tax ordinance. The law requires local businesses to pay a tax of 1.5 percent on all net-profits to the county. All employee wages are taxed at an additional 1.5 percent.
According to data from the County Occupational Tax Office receipts from profits have increased from approximately $75,000 in 2013 to about $120,000 in 2017 a 37 percent increase over the past five years. (Note: the figures used in this analysis represent a calendar year as opposed to a fiscal year.)
While the profit receipts have increased steadily since 2013, the $19,000 increase from 2016 to the last year is the largest gain, a growth of more than 11 percent. Tucker says she believes the implementation of the business license is largely responsible for the increase.
Still, the net-profit tax comprises only a small percentage of overall occupational tax receipts for the county. Net profit tax receipts for January through December 2016 generated about $106,000, while payroll tax receipts brought in more than $915,000 for example. Historically, the net-profit portion of receipts account for only about ten percent of all revenue generated from the tax.

There still remains an issue with the Occupational Tax Office not being able to collect all that is owed. Until the federal government allowed voluntary withholding from employee paychecks starting in 2014, many thousands of dollars went uncollected from federal workers alone. The withholding has helped increase the percentage of federal employees paying taxes on their earnings, but there are still some holdouts, as well as other accounts that owe for several years of back taxes.
During last week’s Fiscal Court meeting Tucker stated her office had 56 criminal summonses for past-due OC Tax accounts. Those summonses resulted in 11 accounts being paid in full, with another dozen making monthly payments. The remaining accounts apparently are still awaiting some form of adjudication.
Magistrate Roger Phillips asked Tucker for an update on sending past-due accounts to a collection agency, which had been recently approved by the Fiscal Court.

Tucker stated she had sent details on two accounts as a “test” to the agency, but has yet to have heard any word from the company on the status of the collection efforts.