Occupational tax on 'honor system'

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By Zach Osowski

The much discussed La Grange compensation tax will go into effect on Oct. 1 with the hope of pulling the city out of debt.

While the plan starts in October, the amount the city will bring in won’t be known until February. That’s because the tax will be collected quarterly, city attorney Steve Emery said. The tax is also solely dependent on the businesses keeping track of their employees’ wages.

Ryan Richins, the city’s code enforcement officer, said the businesses will be responsible for garnishing one percent of their employees’ wages per paycheck and then keeping track of that amount over the quarter. They will then pay the city one lump sum at the end of every quarter which goes toward paying off the $10 million debt the city has on the Oldham Reserve business park.

“It’s an honor system,” Richins said. “But there are safeguards in place.”

The businesses will be required to submit paperwork with the money, detailing how long each employee worked and how much the company took out of their paychecks. La Grange Mayor Bill Lammlein also said the city has the right to audit a company as far back as five years in case they get a suspicious payment.

Richins sent out letters to the 1,100 business in La Grange registered under the city’s business license tax explaining the compensation tax and the requirements. He said only hourly or salaried employees will be subject to this tax. That means any profits businesses make will not be taxed.

It also means contractors such as construction workers, hairdressers or pastors in some cases will not be subject to the new tax.

“If they’re contractors they are still subject to the city’s business license tax,” Richins said.

Currently, if you make less than $68,750 per year as a contractor you have to pay a business license fee of $55. Conversely, the compensation tax would take $687.50 from the same person if they were salaried or paid hourly.

Companies will have to keep tabs on employees who only work part time in La Grange. Lammlein said doctors who might only come here once or twice a week will be taxed while they are in the city. School bus drivers who have a route in the city will also be taxed during the time they are driving in the city limits.

“We’ve tried very hard to make sure we thought of everyone,” the mayor said.

Lammlein said the city will have a better idea of how long the tax will need to be implemented in February when the first round of payments are in. Lammlein said once the debt is fully paid off the tax will come off the books.

“Then I can start calling around for loans to pay off this debt,” he said. “Once they know the money will be coming in.”

Any business that has questions should feel free to call either Richins or Lammlein at 222-1433.


Email us about this story at zach@oldhamera.com.