As Council Cracks Down, Merchants Vow to Pay Back H-Taxes

RIDGEWAY (Jan. 22, 2016) – Town Council members, during their Jan. 14 regular meeting, resolved to get tough with owners of a pair of downtown restaurants who have failed to remit any of their portion of Ridgeway’s hospitality tax. Both owners have since told The Voice that they intend to pay, although at press time no payments had been remitted.

Two of the town’s four establishments subject to the tax – Laura’s Tea Room and Ridgeway Station Café – have made no payments to the Town since the ordinance establishing the tax went into effect last August. The first payments were due on Sept. 20.

Over that same period of time, the Old Town Hall Restaurant and City Gas have combined to kick in more than $2,559 to the Town’s coffers.

The issue first came to light during Council’s Jan. 7 work session, and during the Jan. 14 meeting when Council learned that the Tea Room and the Station Café had ignored late notices, Council considered the strength of the ordinance and the possible consequences for failing to comply with it.

“I think the ordinance is good, but I think now we’re failing to follow through with the ordinance,” Councilman Heath Cookendorfer said. “We have to be more diligent as a Council to enforce it. I think we’re at the point now where we should be moving to the secondary section with this for some of these people, correct? We’re at that $500 penalty for some of these people.”

The ordinance, which passed final reading last May, imposes a 2 percent tax on the gross proceeds of the sale of prepared meals and beverages, to be paid to the Town by the 20th of each month, beginning Sept. 20, 2015. Any tax not timely paid shall be subject to a 5 percent penalty, the ordinance states, each month. Failure to comply “shall constitute a misdemeanor,” the ordinance states, punishable by a $500 fine or 30 days in jail, or both.

“The thing that we have to get in their minds is that it’s not their money,” Cookendorfer said. “It’s tax money.”

Indeed, the 2 percent has been collected by restaurants from customers, as an additional tax on their bills. But if a restaurant has failed to tack that 2 percent onto customers’ bills, the ordinance states the establishment is still responsible for paying that 2 percent of gross proceeds to the Town.

Karen Siegling, owner of the Station Café, confirmed Tuesday that she has been collecting the 2 percent from customers, but said her restaurant has been struggling to make ends meet.

“We had some difficulties here at the restaurant,” Siegling said. “We’ve just been struggling.”

Siegling told The Voice that she intended to pay this week.

“I’m not trying to cheat anyone on my taxes, I promise you,” she said.

Carol Allen, owner of the Tea Room, said she was planning to pay either Tuesday or Wednesday. She also confirmed that she has been collecting the 2 percent from customers.

“I just plain didn’t get it done,” Allen said. “I felt so horrible when it came out.”

The associated paperwork, Allen said, is a little more difficult for her business, which sells more than just food.

While failure to pay could land the offenders in some hot water, it also puts the Town in a precarious position when preparing its annual budget. At press time it was not known how much the restaurants owe.

“And the thing about it is, the merchants who are paying this,” Herring said, “part of the hospitality (tax) goes back to help support them to bring people here for tourism.”

During Council’s discussion of the tax last March, then Town Councilman Russ Brown, who introduced the tax, said that state law regulated how hospitality tax revenues could be spent. The revenue could, he said, go toward tourism-related, cultural, recreational or historic facilities, as well as highways, roads, streets or bridges providing access to tourist destinations.

The revenue could also go toward advertising and promotion of tourism development, and to water and sewer infrastructure serving tourism-related facilities. The funds could go toward preserving the arch on the old school property, and for promoting Pig on the Ridge, Arts on the Ridge and other Town events.

The ordinance, which only states the taxes should be “timely remitted,” gives Council considerable leeway as to when to impose the 5 percent penalty and when to enforce the $500 fine. But with the Tea Room and the Station Café four months in arrears, Council elected to send out one more letter with a copy of the ordinance, informing both that they owed not only the 2 percent in back taxes, but the 5 percent penalty for each month as well.

Those notices may be unnecessary, if Allen and Siegling pay as promised. However, if those notices go unanswered, Council said, the restaurateurs could find themselves facing a municipal judge.