By CALEB BEDILLION / Daily Journal
As of September, the city of Saltillo has completed the repayment of about $139,000 in excess sales tax revenue directed toward the city, according to Mayor Rex Smith and City Clerk Mary Parker.
“Parts of the city of Tupelo have a Saltillo address, so some businesses in Tupelo would file for their sales tax license, and they (Department of Revenue) ended up putting them into Saltillo because of their address,” Smith said.
Individual businesses must collect sales tax revenue off retail activity and then send that tax to the state Department of Revenue.
The Department of Revenue in turn returns a share of those revenues, 18.5 percent, back to the municipalities where sales activity originated. These payments to municipalities occur on a monthly basis.
The state retains all sales tax revenue generated outside of incorporated areas.
Smith estimates that about 20 months ago, his administration discovered that Saltillo was receiving sales tax diversions from revenue generated by businesses around the Barnes Crossing Road area in Tupelo.
The mayor described this discovery as a “terrible feeling.”
Saltillo’s city clerk said the most financially significant error appeared to involve car dealership Carmax.
Not all businesses with Saltillo addresses around the Barnes Crossing Road area were incorrectly classified. Other than Carmax, Roberts said the other businesses involved were mostly small in nature.
In total, approximately $260,000 was incorrectly sent to Saltillo.
However, in turn, approximately $119,000 of revenue that should have been sent to Saltillo was never sent, also due to errors of classification.
“Some of what should have been going to us was marked as in the county,” Roberts said.
The Department of Revenue worked out a deal to deduct the mistaken diversions from Saltillo’s monthly revenue checks for a 17-month period, ending in September.
“It’s created some issues, but it hasn’t killed us,” Smith said.
Department of Revenue spokesperson Kathy Waterbury said these kinds of errors typically occur because of mistaken information provided by businesses.
“It doesn’t happen every day, but it’s not rare either,” Waterbury said.
She noted that in an effort to eliminate errors, the Department of Revenue makes available lists of businesses registered within every municipality.
“We ask them to help us by monitoring that and make sure that it is correct,” she said. “We don’t have the resources to go out and check it all ourselves.”
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