Richland County Penny Tax program in jeopardy as state suspends deposits

State tax officials, on Wednesday, told Richland County it will get no more penny tax funds until the county council adopts “a uniform standard” as recommended by state tax officials, to make sure that all “Penny Tax revenue is spent specifically on transportation-related projects.”

The letter was released Wednesday night by Richland County officials along with a statement pledging to review the letter and work with DOR toward a resolution as county staff address the topic with the county council at it’s next meeting on Tuesday.

State deposits into the Richland County Transportation Penny Tax fund are made quarterly, Department of Revenue director Rick Reames pointed out in a letter dated Wednesday, April 27, to Richland County Administrator Anthony McDonald. The next deposit is scheduled for early July.

Reames said the state was forced to end distribution of penny tax funds to the county because the county’s Penny Tax Program is in violation of state tax law.

After reviewing the history of DOR’s discussions with county staff about problems in the Penny Tax program, Reames said the county council has had “adequate time and opportunity to enact reform” as demanded by the state. Its failure to do so, Reames said, forced DOR to “enforce the state’s tax laws” and “immediately cease allocations of revenue to the Richland County Transportation Penny Tax Fund.”

Reames said the majority of non-compliance concerns would be remedied if Richland County Council adopts a uniform standard as recommended by the state Department of Revenue.

The funds cut-off followed what had appeared to be promising discussions between county and state officials.

But Reames said the actions authorized by the county council weren’t enough and didn’t solve the core problem — the lack of a ‘uniform standard for determining qualifying expenditures.”

This story was originally published April 27, 2016 at 11:14 PM with the headline "Richland County Penny Tax program in jeopardy as state suspends deposits."