Southington Businesses May Be Subject To Local Tax Audits

SOUTHINGTON, CT — Local officials have tabled a proposal to randomly audit Southington businesses to determine if they're properly paying personal property taxes and then bill them additionally if they're not.

The council Jan. 9 unanimously voted to table the item, but it stopped short of nixing the idea, with the matter likely to be revisited.

Some local leaders expressed some concern for "mom-and-pop" shops and how they would be affected by a formal business audit campaign.

Before commiting to an audit effort, councilman said they needed more information about what operations would be impacted.

"I would like to see the list of the businesses. If we saw the businesses, it would give us a better understanding of which businesses would be targeted. It's public knowledge. Anyone can access it," Councilman Michael Del Santo said at the meeting last week.

Southington Director of Assessment and Revenue Theresa Babon spoke before the council Jan. 9, introducing representatives from Tax Management Associates, an auditing firm that would conduct the review.

Jay Taranto and Ryan Hunter were at Southington's council meeting to represent TMA, which is a Charlotte, N.C.-based company that serves municipalities nationally.

Babon, who started working for the town in 2018, said, in the past, the town would conduct random audits of, say, five businesses a year.

This practice, however, hasn't been done "in a long time," she said, adding it might now be time to start auditing businesses again.

Like many towns, Southington is seeking ways to increase tax revenue as much as possible without negatively impacting taxpayers any more than necessary.

Auditing taxpaying businesses to make sure they're properly paying their taxes is seen as a step toward that goal.

TMA officials said they've worked in Connecticut for two decades, saying the "goal is to make sure everyone is paying their fair share of property taxes based on what they own."

Taranto and Hunter said the company has done 9,000 audits in Connecticut and more than half are not paying what they actually would owe.

TMA estimates they would uncover $78 million in revenue for its audits in the state.

A hypothetical Southington initiative, TMA said, would have about 412 businesses in town eligible for audits over a three-year period.

TMA said its representatives would be temporarily based in the Southington assessor's office and issue letters to businesses notifying them of selection for a random audit.

The company would schedule a meeting with a business and visit with the person in charge of the businesses' finances.

Each audit would take between 30-60 days to complete from the first contact and include site visits and inspections, TMA said, with four or five auditors working with the Town of Southington alone.

The company then would be paid 18 percent of what is owed to the town, with TMA not receiving any payments until the tax blls go out for what is owed.

Some on the council suggested town employees, simply, do so-called "spot audits" instead of a formal auditing process.

Babon, however, said town assessor's office employees don't have sufficient time to do spot audits and "she would prefer to work with a professional company that has experience in the State of Connecticut."

For the minutes of the Jan. 9 Southington Town Council meeting, click on this link.

For more information on Tax Management Associates, click on this link.