Business equipment audits could bring Shelton new tax revenue
The city will alter the way it is compensating a private firm to conduct audits of business equipment that should be subject to property taxes.
Northeast Financial Management Associates now should be paid $400,000 to do audits on up to 600 personal property accounts of companies in the city.
City officials will continue to finalize the exact wording of the contract with Northeast Financial.
“We still have some work to do on this,” Mayor Mark Lauretti said at a Board of Aldermen meeting, when a vote was taken on revising the contract language.
The original contract with Northeast Financial was approved in July, and the aldermen voted to change it last week.
Businesses pay taxes on equipment in CT
The personal property of businesses, such as computers, machinery, fixtures and furniture, are subject to property taxes in Connecticut.
Many towns do personal property audits every few years because business equipment is mostly self-reported, and towns often use outside firms that collect fees based on the audits. The outside firms work with a municipal assessor’s office.
Corporation Counsel Thomas J. Welch told the Board of Aldermen the city originally was going to pay Northwest Financial a certain fee per audit, but “that formula has broken down” because some individual companies have multiple personal property accounts with the city, not just one.
Lauretti said the issue was whether an outside auditing firm should be paid for doing 10 accounts if a company should have 10 personal property accounts with the city.
New revenue is expected
Welch said the audits will generate new property tax revenue that is more than sufficient for the city to pay Northeast Financial for the work.
Lauretti agreed, saying the audits could generate $2 million to $3 million in new revenue in the first year. The mayor also stressed the exact amount is uncertain, but said these funds “rightfully belong to us.”
Lauretti noted that once business equipment is put on the tax rolls, “it’s on there a long time unless the company moves.”
Because Shelton has a low tax rate, he said, some companies put expensive equipment in offices and factories located in the city as well as register their business vehicles here.
No audits done in past two decades
Lauretti said now is the right time for Shelton to be doing the personal property audits. “We haven’t done this for 25 years in the city,” Lauretti said.
Aldermanic President John F. Anglace Jr. agreed. “I think it’s the prudent thing to do,” he said. “It has to be done periodically to keep things honest.”
Anglace said City Assessor William Gaffney has experience with personal property audits from when he worked in another town, and has worked with Northeast Financial in the past.