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City Controller: Hundreds Of Philadelphia Businesses Could Be Cheating On Sales Tax

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PHILADELPHIA (CBS) – Hundreds of businesses in Philadelphia could be cheating on their sales taxes, according to a new report released Wednesday by the city controller.

Investigators looked at 100 businesses that are licensed with the city and should likely be collecting sales tax. They found those businesses filed no tax last year, even though 80 percent of them were open and operating.

“The findings were disturbing,” said City Controller Alan Butkovitz. “Eighty percent of the sample was not sending sales tax to Harrisburg, which means Philadelphia was not getting its 2 percent.”

Sales tax in the city is 8 cents on the dollar, with 6 cents going to the state and 2 cents going to the city. The city increased its take in 2009 by a penny as it faced an enormous budget shortfall.

Investigators with the controller’s office visited ten businesses in person and received suspect receipts on several occasions. At least one business charged customers for the tax but did not remit it to the city. Several other businesses simply did not charge tax, even though investigators bought taxable items.

Watch the video…

Some receipts were written by hand including one that was on a napkin.

“They [the investigators] had to beg for a receipt,” Butkovitz said.

The report also includes a list of the top 10 sales tax delinquent businesses in the city. Philly Car Share, came in at number three, allegedly owing $258,287.

“That’s under dispute with the state,” said Gerald Furgione, Philly Car Share’s executive director. “It’s a long process. Our attorney tells us it’s probably going to take three years to resolve.”

Furgione says the debate is over a $2-per-day state tax on traditional rental cars. He says Philly Car Share customers should not have to pay it because the non-profit’s average rental time is only a few hours.

To read the full report, click here

Reported by Ben Simmoneau, CBS 3

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