Selma doubles up on tax service

Published 5:18pm Wednesday, October 23, 2013

The Alabama Department of Revenue will take over Selma’s tax collection services Nov. 1, but the city hasn’t quite given up on outgoing tax collection service Revenue Discovery Systems.

The Selma City Council voted unanimously Tuesday to extend the contract with Revenue Discovery Systems for an additional three months to recover $100,000 in uncollected sales tax.

Selma city attorney Jimmy Nunn said the city pays RDS $70 per hour for auditing services. Nunn said the additional three months wouldn’t cost more than $5,000.

Selma Mayor George Evans proposed the extension because the RDS has already begun work on recovering the money.

“They have already identified this money prior to the city switching over,” Evans said. “There is still $400,000 out there in underreported sales tax that is owed to us. Can you imagine what half a million would do for our city?”

The council voted in favor of switching switch to the department of revenue during its Sept. 10 meeting.

One major reason behind the switch was $500,000 in uncollected sales tax revenue. As of Aug. 31, the city had collected approximately $9 million in sales tax — nearly $300,000 less than least year.

Many council members blamed hotels, convenience stores and tobacco stores as the main culprits.

“We just have a number of people who are not paying or reporting their taxes,” Ward 1 council member Cecil Williamson said after the September meeting. “The lodging tax is down and the cigarette tax is down. I think the problem is widespread among hotels, convenience stores and tobacco stores.”

The Alabama Department of Revenue will charge more than RDS, but council members say the added cost is worth the price.

Currently RDS charges the city $1.85 for every $100 collected in sales tax. The Department of Revenue will charge a maximum of 2 percent of all sales tax collected.

Several different services are included in the 2 percent, including filing of returns, auditing services and electronic sales tax collection.

The Department of Revenue’s tax collection services work on a sliding scale, which means the city’s cost for tax collection may steadily decline, local government liaison John Paradise said.

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