Naples policy tough on personal property tax debtors

By Dawn De Busk

Staff Writer

NAPLES — The draft for a Naples personal property tax collection policy drew mixed reviews, although it appeared it could be on a fast-track to be adopted in two weeks.

One resident said the policy gave too much leeway and latitude for the Naples Board of Selectmen to favor one taxpayer over another by allowing the selectmen to decide whether or not to go through the legal process of collection.

“First of all, on the regular tax, there is an automatic lien process. We don’t make it political. (It’s not about) who we like and who we don’t like,” Jim Grattelo said.

“Now, we just took the entire tax collection process and made it political. And you cannot do that. In fact, you shouldn’t do that,” Grattelo said during the selectmen meeting on Monday.

“What you are doing is the wrong route to take,” he said.

The proposed policy addresses the legal process for leveraging collection of personal property taxes, also known as the business equipment tax.

Toward the end of the discussion on Monday night, two selectmen had differing opinions on a timeline for adopting the policy.

Selectman Christine Powers said it needed improvements, such as a capped dollar amount so that the uncollected debt is not less than the cost of civil action. That detail was mentioned by the board and not during Grattelo’s comments.

“I’d like to say that this is still just a draft,” Powers said.

The selectmen had received the town attorney’s draft of a personal property tax policy on Friday.

“Clearly we have to take a look at this in many respects as Jim (Grattelo) noted. Clearly, it has to be reviewed carefully and we have to adopt a policy,” Powers said.

“This is the beginning of that (process). We are moving forward,” she said.

“It is going to be on the agenda until we have a handle on it,” Powers said.

Chairman Bob Caron II advocated for adopting the policy during the next meeting in two weeks.

“What would be really nice to see is that you take this back, review it, if you have questions bring them to the next meeting,” Caron told board members.

“I would like to move forward with this by the next board meeting, get something pretty much written in stone so we can have it on our books,” Caron said.

Earlier in the discussion, Grattelo said there were some discrepancies with the personal property tax list.

He said some local businesses are being taxed for personal property, while others are not even on the tax status list.

“I have gone through that list. There are some disturbing things on this list. What is disturbing is: There are businesses in this town that are not on that list,” Grattelo said.

“Personal property taxes are to be paid by every business that has personal property,” he said.

“There are disturbing names that are not on that list. Yet competing businesses are on that list, and they are paying personal property. How does that happen,” Grattelo said.

Naples Town Manager Ephrem Paraschak began to explain how the assessor would go about determining the value of taxable items that a business owns.

Later, it was discovered that one component of the personal property tax might need to be bolstered. That piece of the puzzle is the knowledge of the taxable business equipment of businesses in town.

For years, the assessor has not been directed to update the list of taxable business equipment, Paraschak said. The assessing firm has not assessed taxable items of new businesses either, he said.

“It is safe to say that every business in the Town of Naples should be paying personal property (taxes). There is no exception,” Grattelo said.

Paraschak responded to the statement.

“That is not how the town of Naples had it set up for personal property taxes in the past, no,” Paraschak said.

The town manager said that Naples has not taken an aggressive stance like other towns when it comes to assessing personal property.

During Monday’s meeting, board members did not address the idea of reassessing the taxable items of area businesses.

Paraschak outlined the proposed policy, which “the board directed me to provide.”

“The town lawyer tweaked one for a town the size of Naples,” he said.

“We would put together a list once a year. Then, in June, the board can authorize the town attorney to look at civil action. Civil action is how you collect personal property taxes. The attorney would draft a letter, more or less a threatening letter,” Paraschak said.

“If you don’t pay it in a month, the list would come back to the board. The board will decide which personal property taxes to pursue,” he said.

“The policy gives the board pretty wide latitude,” he said.

For delinquent real estate taxes, the process for collecting those is simpler, he said.

“With personal property taxes, it is a much more complicated procedure. It cannot just be done at the registry of deeds. It goes through the state courts. It is more complicated and more expensive,” he said.

“At the minimum it (the proposed policy) directs every year that the town clerk provides the board with a list” of which business owners have not paid, he said.

As mentioned by Grattelo, the personal property tax collection account status list does not include many businesses located in Naples. The paperwork lists accounts mostly by last names of business owners — some of which have home-based businesses; and about 20% of those are listed the actual name of the business.

For example, Bray’s Brewpub is listed as being taxed for personal property in 2013 through 2015, while The Galley Restaurant — owned by Matt and Meg Sullivan is not listed. In fact, no other restaurant appears on the tax list by business name. It is possible that the town taxes the beer-brewing machinery, which other local restaurants that serve alcohol do not have on the premises.

According to the Maine Revenue Services (MRS) Property Tax Division, full-service restaurants can be taxed for commercial kitchen appliances and storage equipment.

Also, according to the Town of Naples tax status list, it appears that the personal property tax has not been applied to any of the local marinas. The tax list does not include the names of marinas or marina operators. Items like heavy equipment, computers and photo copiers can be taxed by the town, but there is no evidence of that.

Many business can qualify for the Business Equipment Tax Reimbursement through the State of Maine, according to the MRS document.

As of Dec. 4, 2015, $270,000 in personal property tax is owed to the Town of Naples. However, it is difficult — if not impossible — to collect bills that are more than 10 years old.

Therefore, going forward from 2007, the amount of uncollected personal property tax is $245,561.

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