City of Bethel Sales tax amnesty program

An ordinance by the Bethel City Council establishing a short-term amnesty program requiring compliance with the sales tax and business licensing codes for the payment of delinquent taxes and allowing the forgiveness of fees, penalities, and interest to incentivize voluntary compliance.

This is a non-codified ordinance and is not part of the Bethel Municipal Code.

“Notwithstanding BMC Chapter 4.16.290, Forgiveness of uncollected taxes, penalties, and interest, the Bethel City Council adopts and authorizes the city manager to create and implement a one-time amnesty program for businesses or individuals doing business in Bethel who may have an existing tax liability,” states Ord. 22-34. “The amnesty program allows penalties and interest to be waived for the tax filing periods between October 1, 2019 and October 1, 2022.”

There are eligibility rules for participation in the amnesty program:

1. On or before December 31, 2022, the seller applies on a form and in a manner specified by the finance department.

2. On or before February 28, 2023, the seller files complete tax returns for all tax reporting periods between October 1, 2019, and October 1, 2022, for which the seller has not previously filed a tax return, and/or files completed amended returns for all tax reporting periods for which the seller underreported the tax liability.

3. At the time of filing completed tax returns, the seller pays in full all taxes due for all periods for which amnesty is requested or agrees to and complies with the terms of a repayment plan as provided in BMC 4.16.280. Failure by the seller to fully comply with the terms of a repayment plan agreement shall render the participation in the amnesty program null and void, unless the city manager, following recommendation from the city attorney, determines that the failure was due to reasonable causes.

4. No later than December 31, 2022, the seller has or obtains a city business license in accordance with BMC 5.04 and sales tax certificate in accordance with BMC 4.16.090.

5. The delinquent sales tax was due on or between October 1, 2019, and October 1, 2022, and the seller agrees to hold all records for the reporting period(s) for which amnesty is requested, and that are required under BMC 4.16.330 until November 1, 2024

6. The delinquent tax amount is paid in full by November 1, 2024.

7. The seller understands that participation in the amnesty program does not exempt the seller from being audited in the same manner as other sellers. If, between the date of the amnesty agreement and December 31, 2024, the finance director finds any other nonreporting or underreporting of tax liability by any seller who could have otherwise been eligible for amnesty, the finance director shall impose penalties as permitted by Chapter 4.16.

The amnesty program does not apply to sellers who:

1. Have entered into or are negotiating a compromise or settlement agreement with the City of Bethel regarding an unpaid tax liability.

2. Are involved in a pending administrative, civil, criminal, or bankruptcy court action. In this section, “pending administrative action” includes a sales tax audit notice issued on or before October 1, 2022, unless such seller has engaged in corrective action with the finance department in which case the seller may participate in the amnesty program.

3. Are currently seated city council members, the currently seated council member’s

immediate family members, or any organization of which the currently seated council member is a director, officer, or employee between January 1, 2020, and December 31, 2022.

Immediate family member includes:

a) The spouse of the person;

b) Another person cohabiting with the person in a conjugal relationship that is not a legal marriage;

c) A child, including a stepchild and an adoptive child, of the person;

d) A parent, sibling, grandparent, aunt or uncle of the person; and

e) A parent or sibling of the person’s spouse.

“Sales tax evasion presents a serious fiscal problem resulting in the loss of large amounts of revenue to which the City is entitled;” states the ordinance. “The City’s finance personnel are taking a closer look at the community’s sellers’ sales tax filings and have identified a significant level of noncompliance, so much so that it would take enormous resources to work with the presumed hundreds of violators.”

Creation of a program for the forgiveness of fees, penalties and interest associated with the delinquent taxes is expected to incentivize compliance while efficiently managing the Finance Department’s personnel and protecting the delinquent tax principal held in trust for the City, and the fees, penalties, and interest applied to the principal of the delinquent taxes outlined and mandated by the code are high, especially for those sellers that refuse to comply with the audit process, the ordinance continues.

Sellers that apply and follow through with the amnesty program could see significant financial savings with the waiving of fees, penalties and interest.

Ordinance 22-34 was introduced by Council Member Beth Hessler on September 27th, 2022. After public hearing on October 11th, 2022, the ordinance was adopted by a vote of 4-3. Voting yea were council members Mark Springer, Eric Whitney, Hessler, and Patrick Snow. Voting nay were Mayor Rose Henderson, Vice Mayor Henry Batchelor, and council member Sophie Swope.

The ordinance shall become effective following adoption by the Bethel City Council.