Business owners who owe payroll taxes could be dragged into court and have licenses canceled

The city of Sandy is going to crack down on business owners who are not paying their fair share of the transit system costs.

Before the Sandy City Council met to consider a staff proposal, enforcement “wasn’t well defined,” said Finance Director Seth Atkinson.

The Clackamas County Sheriff’s Department and the county circuit courts were designated for the job of enforcement.

But that wasn’t effective, said Transit Manager Julie Stephens, and there are nearly 140 business owners not in compliance with the city’s payroll tax ordinance — some in arrears for years and others who she suspects under-report in order to pay a smaller fee.

“We’d like to assist businesses to come into compliance (with the ordinance) rather than penalize them,” she said after the council meeting. “But everyone needs to follow the rules.”

The proposal considered and approved by the council at its Nov. 19 meeting includes transferring enforcement of delinquent payroll taxes to the Sandy Police Department.

An additional and related proposal was to cancel a business license for any business not paying the fees.

Enforcement by Sandy police officers is limited to issuing citations to businesses identified in arrears with their payroll tax payments.

A citation will require either an appearance in Sandy Municipal Court or full payment of the assessment or both.

The council considered separately the idea of withholding a business license when a business owes payroll taxes, and stated this penalty would apply to any business owing the city money for any reason. This ordinance is on the council’s agenda for final approval at its Dec. 3 meeting.

Stephens admitted that businesses not complying with the city’s ordinance is a big problem. She said of the city’s 450 businesses, about half are small businesses and half are larger corporations.

Of the city’s small businesses, about half are not in compliance with the payroll tax ordinance, while about 95 percent of the corporations submit the taxes they are assessed.

Independent contractors are among the worst offenders, Stephens said, and many of them are real estate agents who don’t believe they should be charged.

City Councilor Carl Exner, who is a real estate broker, says Realtors should pay just like any other business owner or independent contractor doing business inside the city of Sandy.

Along with approving the ordinance, Exner said, the city should do some “outreach and education.”

The council’s final vote on the change in enforcement was unanimous, while the vote on the first reading of withholding a business license also was unanimous.

For more information, call Stephens at 503-489-0925.

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