City officials last week heard the first reading of an ordinance to establish its own occupational tax in an effort to claim its share of the revenue.
Somerset Mayor Eddie Girdler during the Monday, Feb. 25 Somerset City Council meeting emphasized the city’s own occupational tax rate is offsetting the county’s current 1 percent rate, taken from employees’ pay and from businesses’ net profit.
That means no one will be paying an occupational tax to two different entities.
“There’s no additional dollars, we’re just dividing up the pot,” said Girdler. “We and the county are just cooperating ... there will be no increase at all on anybody’s taxes.”
According to the ordinance, read by Somerset City Attorney Carrie Wiese during the meeting, the city’s rate could be set at six-tenths of a percent, if nothing changes with the ordinance.
Wiese touched on several parts of Ordinance 13-02. Sections of the ordinance include which businesses must pay the city’s tax and which businesses are exempt — things that align fairly closely with the county’s current tax ordinance.
“Businesses already exempt from the county’s occupational tax will be exempt from our occupational tax as well,” Wiese said. “You don’t pay the county occupational tax, you’re probably not going to have to pay the city occupational tax.”
Wiese also touched on penalties for businesses that do not pay the tax in an effort to evade payment, how businesses should file returns for the IRS and the city, and how the tax is meant to be collected through the employers’ payroll system,
“It’s exactly the same as the other occupational taxes paid,” said Wiese. “It’s the same way the county occupational tax works now.
“Any business that pays the county occupational tax will understand this,” Wiese later said.
Girdler said he’s hopeful the county will collect the taxes for the city, since that entity already has the system up and operating.
“There’s no use in duplicating that at this time,” Girdler said.
The ordinance comes after a tentative agreement was reached between county and city officials regarding the division of the occupational tax fund after the city raised some concerns about what Girdler had said was a funding shortfall for Somerset-Pulaski County EMS.
The city, as per a 1995 agreement, had been funding EMS.
City officials had looked at claiming its chunk of the occupational tax revenue to help cover that shortfall, which would have been anywhere between 55 percent and 75 percent of the county’s current occupational tax revenue. That would have left the county reeling.
But before the city moved in to take its chunk of the occupational tax revenue, both sides agreed to negotiate a new agreement involving EMS funding and restructuring of the occupational tax.
Girdler suggested Monday that the tax could go into effect on July 1, 2013, which would coincide with a new fiscal year.
“There will be plenty of time for everybody to get their forms and get it to their payroll clerk,” Wiese said, about the July 1 start date.
Wiese said the revenue from the tax will go into the city’s general fund.
The council did not comment on the reading Monday. Comments are held until the second reading of an ordinance.
Ordinance 13-02, which is still subject to change, is available to the public at Somerset City Hall.