It’s not every day that a government ends a tax.
And when the city ended its quarter-cent sales tax on Oct. 1, some local businesses didn’t know they should stop collecting the tax.
Businesses didn't get a letter advising them to stop collecting the quarter-cent sales tax, which voters approved in 2015 to raise money for a new emergency radio system, three fire stations and one police/fire station.
Some people — including City Councilwoman Cyndi Lamm, who may run for Lincoln mayor — blamed the city for not notifying the businesses the tax had ended after three years.
The mayor’s office should take a more active role “in protecting residents and visitors from being overtaxed and businesses from being caught unaware when city taxes are scheduled to be reduced,” said Lamm in a news release Thursday.
But sales tax collection is the responsibility of the state, not the city, said Diane Gonzolas, an aide to Mayor Chris Beutler.
And in his own news release, Beutler said Lamm didn't understand the process: "Cyndi Lamm’s campaign news release on sales tax protocol reflects a total misunderstanding of the notification process and a lack of research."
The state collects the tax then passes on the city’s portion and charges the city 3 percent for that work, said Rick Hoppe, chief of staff to Beutler.
The Nebraska Department of Revenue did what it normally does and is required to do by law whenever a sales tax changes, according to Jim Bogatz, with the Department of Revenue.
The state posted the information to its website, sent out news releases, and sent email notices to people and businesses who sign up to receive those notices.
Letters also went out to a number of organizations, including the League of Municipalities, the Nebraska Chamber of Commerce, but not to the individual businesses collecting the tax.
State law does not require a city to do anything to notify businesses about changes in sales taxes.
The city did not send a letter to businesses before the quarter-cent sales tax began three years ago, and did not send a letter before it ended, according to Gonzolas.
The Journal Star reported the sales tax had ended on Oct. 2, and the city sent out a news release in early February and on Oct. 3.
The city doesn’t have a list of businesses that collect the sales tax to use for a letter, Gonzolas said. And getting a list from the Revenue Department would be difficult and expensive, said Bogatz.
"I don't think we would spend the time and IT staff time doing that," he said. “Our local businesses should not have to scroll a Twitter feed or pick up a newspaper to know when they might need to adjust their tax collections downward. It’s not right to suggest business owners to set their watches in February for something that may happen in October,” said Lamm in her news release.
“It is clear that this administration does not have an appropriate protocol or process for notifying local businesses or for protecting our residents and visitors when a city-imposed tax expires,” Lamm said.
But Beutler suggested Lamm should encourage local businesses to sign up for the department’s free subscription, "instead of pointing fingers."
Customers who paid that quarter-cent sales tax to a business after the Sept. 30 cutoff can seek a refund from the state Department of Revenue, said Bogatz.
But the department will not refund any amount less than $2, which means the customer would have to spend at least $800 to get a refund.
Businesses that collected and passed on the quarter-cent tax after Sept. 30 are not eligible for any refund, he said.