Chelmsford businesses skirt tax reporting law

CHELMSFORD, Nov 18, 2008 (The Sun - McClatchy-Tribune Information Services via COMTEX) -- BKC | Quote | Chart | News | PowerRating -- Town officials are hoping a little public derision will work where a state law won't.

On Friday afternoon, the town posted a list of 355 Chelmsford businesses that failed to submit annual income and expense reports on time. The reports, which ask for information on rents received, utilities, pay roll, maintenance, security, etc., help town assessors to determine rents and set the tax rate.

But with so many businesses opting to pay a $50 fine instead of filing their information, town officials are looking at other means of boosting the compliance rate.

"We hope it will have an impact," said Town Manager Paul Cohen. "Besides charging a fine, the best we can do is put it on our Web site."

The state Department of Revenue requires that commercial, industrial and other potential income-producing properties are valued by using at least two of three standard appraisal approaches. Income and expense reports are one of the most common ways municipalities assess property values, in addition to looking at market publications to see what properties are selling for.

Chelmsford assessors tacked on a $50 late fee for delinquency for the first time last year, after receiving a 26 percent return rate on expense reports. Four hundred businesses were fined $50, the maximum under state law.

Among the 355 businesses facing fines in Chelmsford, are Burger King, Cumberland Farms, Hong and Kong restaurant, Kazanjian Enterprises Inc., and Lowell

General Hospital.

But frustrated town officials have said that $50 isn't a big enough penalty to prompt compliance.

Chief Assessor Frank Reen said some larger companies might have to pay more than $50 for an accountant or comptroller to fill out the 38-line questionnaire.

"In that sense, it's actually more cost-effective for some to just pay the fine," Reen said.

After assessors mail out the forms, businesses have 60 days to return them. Reen said there are a variety of reasons for delinquency. Some people just get busy and forget, while others view providing income information to the town as an invasion of privacy.

Assessors in other communities report similar return rates.

In 2007, Jeanne Kidder, assistant assessor in Tyngsboro, said her office mailed out 150 forms, but only about 50 were returned.

"It's a very important tool for assessors because we want to arrive at fair and equitable values," Kidder had said.

In Lowell last year, assessors received about 29 percent of 2,279 forms back, and Dracut assessors received about 25 to 30 percent of 432 forms.

According to the Department of Revenue, the $50 penalty was an amendment to the law passed in 1979. Robert Bliss, a spokesman for DOR, has said he hasn't seen any groundswell to change the law, or increase the penalty.

There is no way to skirt the $50 fine though, if a town or city chooses to impose it.

"The piece that has the most teeth is the loss of the right to appeal," Bliss has said. "If a local business says. 'I sent it but it got lost in the mail,' well, that business would be asked to resubmit."

Reen said he still has confidence in the values Chelmsford has set for commercial properties, but says a higher return rate in income and expense reports would help make the process more efficient.

The state of Connecticut, Reen added, allows municipalities to collect up to 10 percent of a businesses' annual income taxes for delinquent income and expense reports.

"You can probably suspect they have a much higher return rate there," he said.

To view the non-compliance list for real property visit www.townofchelmsford.us

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