An oversight in paperwork for tax abatements in Jeffersonville may allow the city to collect thousands of dollars in owed revenue.
According to Jeffersonville Urban Enterprise Zone Director Kelly Phillips, a number of businesses have not been paying a 10 percent fee to the city as part of a tax abatement they receive. Phillips explained that part of the process for a host of businesses located in Jeffersonville that receive tax abatements is to file a compliance with statement of benefits form — CF1 — annually. The form documents the progress the company has outlined in order to receive its tax abatement.
However, the compliance forms from 2011 and 2012 have not been officially approved by the council.
“The companies, basically, aren’t aware that this has been an issue because they are still receiving the abatement,” Phillips said. “The issue would be if we decided not to approve one of these abatements. We sent everything out, it just wasn’t formally approved at [a] council meeting. The companies were still told to file on time. They still did that.”
Tax abatements allow companies to avoid paying taxes on improvements to buildings or equipment and are usually spread out over a 10-year period. Each year the abatement, or amount the company is required to pay, increases incrementally until the company, at the end of the abatement, is paying full value on its property. The abatements allow companies to mitigate the upfront costs of improvements or expansions.
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Tied to the abatements was something else the city had overlooked.
“Each company pays a fee to us for their tax abatement, typically it’s 10 percent. We have not been billing for those fees,” Phillips said.
She added that she did not know how much money it amounted to, and she was waiting to hear back from Umbaugh and Associates — an Indianapolis financial firm — on what figures the city had failed to collect.
The fee, of about 10 percent, is calculated off the tax rate deduction received by the business. The list of companies included in the city council agenda that have received an abatement over the past two years included 18 or more businesses each year.
“We will be sending these companies letters in the next few weeks for the fees for the last three years,” Phillips said. “The companies should be expecting it. It was in the resolution. If the company is not able make the payment we’ll work with them.”
The compliance forms from 2011 and 2012 were unanimously approved by the council.
MORE ABATEMENTS APPROVED
In addition to the abatements that already exist, three new tax abatements for Jeffersonville businesses were unanimously approved by the council Monday.
The abatements were for Accentf(x), Heritage Hardwoods and Steel Dynamics.
Accentf(x), a local database marketing agency, will receive an abatement as it plans to retain $1.1 million in payroll with 35 direct-mail production jobs at its Jeffersonville facility following a merger. The company also received an abatement for $200,000 worth of equipment.
Heritage Hardwoods, a Jeffersonville manufacturer of cut-to-size veneer, will add 14 new employees and spend $1.6 million on additional production space to add a new product line.
Steel Dynamics will update its Jeffersonville production line. The company will make a $5.7 million investment in machinery and equipment and an additional $2.1 million investment in other related costs. It will retain 98 jobs, with an annual payroll of $8.5 million.
