Failure to pay tax leads to arrest

About 100 businesses have not responded to city's request to file sales tax returns

Posted: Friday, May 06, 2005

An Anchorage man was arrested in Juneau on Wednesday for failing to appear in court over sales taxes owed to the city of Juneau.

Ken Hausinger's case is one among dozens involving businesses currently behind with the city, though arrests are rare. City Attorney John Hartle said the city has had trouble tracking down merchants who operate only in the summer tourist season and then leave.

Hausinger, who formerly owned Northern Exposures One Hour Photo at 325 S. Franklin St., open May-September, failed to show for a Juneau court appearance in February. He was ordered there for failing to file tax returns, failing to remit sales taxes and violating his probation, according to court records. He owed the city $60,471.

He was released Wednesday on $1,000 bail. He said friends who own other businesses on South Franklin bailed him out.

This quarter, about 100 businesses in town haven't responded to requests to file sales tax returns by March 18, according to a notice the city published March 31.

Every quarter, the city publishes sales tax delinquents' business names and the amounts they owe. Finance Director Craig Duncan said the purpose of the newspaper advertisements is to put the delinquents to shame.

In the March 31 notice, the biggest amount owed to the city was Alaska Fur Gallery's $82,877.

Duncan said more than 90 percent of delinquent merchants eventually pay their sales taxes because of serious financial penalties.

People who fail to remit sales taxes can spend up to a year in jail and pay a $5,000 fine, Revenue Collector Carol Meismer said. The penalty for failing to file taxes on time is $25, along with a 5 percent per-month penalty up to a maximum of 25 percent. Interest is calculated at 15 percent per year.

The city files criminal charges if there are flagrant violations of the sales tax code. Hartle said three people were convicted last year for failing to pay sales taxes.

The city also can place a lien on a merchant's property. "When they sell the property, they have to pay the debt," Meismer said.

The city has a policy not to do businesses with sales tax delinquents.

Duncan said only a small percentage of the city's 4,000 merchants fail to file their sales taxes every quarter and that the amount is less than 1 percent of the city's $34 million annual sales tax revenues. But he stressed that it is still illegal not to file and pay sales taxes.

Jeff Gnass, a professional photographer, said the city should consider asking seasonal businesses to pay their sales tax in advance.

"There are ways to do reasonable estimates based on cash flow, the price of products, square footage and foot traffic," Gnass said. "Then the merchants have incentives to reconcile their sales tax."

Hausinger, 38, originally owed the city $84,000 in sales taxes. He said he showed good faith by paying $25,000 back but he couldn't keep up with the winter payment because he didn't have the money to support his five children at the same time.

"I understand that a mistake was made and that it needs to be taken care of," said Hausinger, who plans to run a fishing charter business in Juneau this summer. "The city would get its money back. That was my plan all along."

• I-Chun Che can be reached

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