Farmville council looks to crackdown on late meals tax payments

Published 6:22 am Tuesday, May 7, 2024

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Farmville Finance Director Julie Moore says she sees it every month. At least one or two businesses are late when it comes to turning in their meals tax payments. As it happens on a pretty regular basis, she’s looking for a way to address that. Coming before the town council at their Wednesday, May 1 work session, Moore presented a proposed ordinance for how to handle delinquent meals tax payments. 

“We just need structure, we want to make sure we have guidance to know when we need to do each step we’re allowed to do by our ordinance and the state code,” Moore said. “We just set out some specific guidelines for when you get behind.” 

Before we go over Moore’s proposal, let’s explain what exactly the Farmville meals tax is. The tax is exactly what it sounds like, a type of sales tax levied on all prepared food and drinks sold in the town, with grocery items being the exception. And we said businesses because this tax includes more than just restaurants. Food or drink sold from any business is included.

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There are certain exceptions to Farmville’s tax. Food purchased through a vending machine does not apply, nor do meals served by churches for their members as part of their religious observances. Public or private elementary or secondary schools, colleges and universities may not charge this tax to their students or employees, nor may it be applied to food sold in “hospitals, medical clinics, convalescent homes, nursing homes, or other extended care facilities to patients or residents.”

A history of meals tax in Farmville

The town has had a meals tax of some kind in place since 1988, when it was introduced at a rate of 3%. In 1992, council members voted to increase it to 4.5%. Then in 2003, it went up again to 6.5% with one final increase coming in 2011, when the council voted to raise the tax to where it currently stands at 7%. 

So what does that mean? When food purchases are made in town, people pay the 7%, plus the 5.3% Virginia General Sales Tax, of which 4.3% goes to the state and 1% goes to the town. 

How does that stand up against other meals taxes in the region? Buckingham County is at 4%, the town of Appomattox is at 8%, Charlotte County is at 4% and Lunenburg is also at 4%. 

So what would change?

Businesses have to submit reports and payments for meal taxes to the town staff by the 20th of each month. And Moore isn’t looking to change any of that. She’s also not looking to change the amount charged or adjust the current structure in any way. She just wants to put some clear direction in place when the bill isn’t paid on time. 

Under Moore’s proposal, if town staff haven’t received a report and payment by the 24th or 25th of the month, then the Finance Department would either call or email the business, reminding them that the tax is due. If the money still hasn’t come in by the 1st of the following month, any delinquent businesses will get a formal letter from the finance department. If payment and reports haven’t been submitted by the 20th of the second month, meaning they are now a full month behind in payments, the Town Attorney will send out a letter, informing the business if the money isn’t paid, they could face legal action. 

Two weeks after that letter from the Town Attorney goes out, the proposed ordinance calls for the Finance Department to “coordinate with the Farmville Police Department to discuss initiating legal action against the delinquent business.” 

“We want people to understand that they need to take the meals tax seriously because it’s not their money, it’s the town’s money,” Moore said. 

Council member Thomas Pairet asked if this was a current problem and Moore said she just wants to have a system in place, if needed. 

“We have like one or two every month that seems to lag behind and we just want to have structure so in the future, if we do run into an issue, we know how to proceed,” Moore said. 

What happens now with meals tax? 

Since this was a work session, no action was taken. The proposal will go for a vote this coming Wednesday, May 8, during the council’s regular meeting. That begins at 6 p.m. in council chambers, located at 116 N. Main Street in Farmville.