Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

Sales tax delinquents owe borough $229K


The Haines Borough is moving against three businesses that owe an estimated $229,000 in back sales taxes, interest and penalties.

According to chief fiscal officer Jila Stuart, outstanding assessed amounts include $165,000 from the Mosquito Lake lodge Funny Farm, $36,000 from Haines Sanitation/Community Waste Solutions and $28,000 from the food stand Hog Heaven.

The assembly last week authorized borough attorney Brooks Chandler to file suit against the businesses for failure to pay.

The businesses also don’t have required borough business licenses, Chandler said.

Delinquent tax amounts for Haines Sanitation and Hog Heaven were calculated using previous returns. The Funny Farm has never filed a tax return, Chandler said. “The estimate for (the Funny Farm) is based on an analysis of the gross revenue based on information about the number of rooms and room rates obtained from an Internet search,” he said.

Chief fiscal officer Jila Stuart said the borough has been in contact with Bauer for more than a year and that there is disagreement over the extent that the lodge was in business, and its resulting tax liability.

A December 2011 Chilkat Valley News story about a fire at the business described it as a lodge, and reported a Discovery Channel camera crew staying on the property.

“I lost my job,” Bauer said in the story. The story reported Bauer bought a home on Mosquito Lake Road in 1997 and expanded it to a 6,000-square-foot lodge in 2005.

Mayor Stephanie Scott said it’s the borough’s “unfortunate job” to go after the delinquent businesses.

“It’s never fun to be an enforcer. Never,” Scott said. “That’s what the community wants. It wants rules and it wants people to abide by them.”

The borough sent several certified mail letters to the businesses regarding the unpaid taxes and unfiled tax returns, but the businesses did not respond, triggering the assembly action to authorize filing suit, Chandler said.

Haines Sanitation owner Hall contacted the borough July 9, said fiscal officer Stuart. “They signed a confession of judgment which says, ‘We acknowledge that we owe the Haines Borough this amount of money, and if we don’t comply with the repayment agreement, you can take this confession to court,’” she said.

Hall also turned in his actual tax returns, bringing his repayment total to “slightly less” than the assessed $36,000. Hall must pay the back taxes over the next six months, Stuart said.

Hall apologized to the community for the “mistake” in a press release, stating he “will not allow the situation to happen again.”

The company spent $250,000 in the past two years to improve the landfill’s environmental performance and strengthen waste processing following an order by the Alaska Department of Environmental Conservation to come into compliance, Hall said.

In 2013, the landfill scored a 93 percent on a state compliance inspection, which was a significant improvement.

“I want the people of the Haines Borough and Klukwan to know that CWS is 100 percent committed to being a responsible business citizen,” Hall said.

As of Monday, Hog Heaven was also in talks with the borough regarding a confession of judgment and repayment plan, Stuart said. Funny Farm owner Bauer has been unresponsive, she said.

If the borough can’t come to an agreement with Hog Heaven and doesn’t hear from Bauer during the “last chance” notice sent out after the assembly authorized the lawsuits, Chandler said the borough will file suit by Aug. 1.

“If the borough wins these cases, some of the attorney fees and costs will be added to the judgment. Actually collecting the full amount of any judgment obtained cannot be guaranteed. But we do not believe ‘walking away’ is a legitimate option when faced with repeated failures to pay taxes,” Chandler said.

  The borough also recently filed suits in small claims court against Tlingit Ink and Horizon Plumbing for amounts less than $10,000, Stuart said.

Stuart said not collecting sales tax doesn’t alleviate the requirement for a business to remit it to the borough.

“They owe it whether or not they were explicit about collecting it,” Stuart said. “That’s the way it’s supposed to happen, but if they fail to charge it to the customer, they still are responsible to pay the tax to the borough and take it out of their profits.”

Stuart said the borough doesn’t know whether the Funny Farm, Haines Sanitation or Hog Heaven are collecting sales tax.  

“A lot of municipalities have inspectors to make sure stuff is done to code and we don’t have it,” she said. “We don’t have the staff to specifically have someone dedicated to doing compliance.”

The borough intermittently conducts sales tax audits, Stuart said.


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