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By John Darling For the Daily Tidings November 29. 2014 4:49PM City says market vendors subject to food tax Vendors at the Rogue Valley Growers & Crafters Market in Ashland have not been collecting the city's 5 percent tax on prepared food and beverages. Daily Tidings / file photo For decades, vendors at the Rogue Valley Growers & Crafters Market have operated under the market’s business license, haven't paid Ashland’s 5 percent food and beverage tax on prepared food and drink and didn’t think they had to. But now, the city says they have to pay, including some back taxes. City officials are poised to proceed with collection of taxes from nine market vendors identified as subject to the tax for a period extending back to Sept. 5, the date of a letter from the city notifying two of the vendors they should be paying the 5 percent tax. The market and vendors have not paid and are asking the city to wait on enforcement of the new arrangement until the market, which closed for the season after its Nov. 25 market, reopens in March 2015, giving vendors a chance to start keeping records and charging customers for the tax. The City Council will consider the matter Tuesday evening. Market board members plan to be there and are encouraging vendors to come and testify. The city received a complaint in August about non-payment of the tax, according to city Administrator Dave Kanner , so it sent “secret shoppers” on two occasions to document that vendors were not charging the tax. Two of the vendors were identified either through an address on a receipt or business card. The city later checked its records and found no record of payment of food and beverage tax from those two businesses — Rosa & Maria Mexican Restaurant of Grants Pass and Sultan's Delight of Talent — and sent letters to the two asking them to "pay your tax obligation." “We were unaware of it (liability for the tax) because we were under the business license of the Growers Market,” said June Altunel, co-owner of Sultan’s Delight, a mobile kitchen for Eastern food. Five percent of her sales would be around $15 a day, she said, although they have no records of the period.  “Some days, when it’s raining, we barely make it. The tax is a hardship,” she said. “We didn’t charge that tax, ever. We didn’t charge their little secret shoppers. We’ll just have to raise our prices.”  Other vendors identified as subject to the tax include Daddy's Donuts and Griffin Creek Coffee Roasters. Marcella Bell, general manager of the market, says she and vendors accept the tax is inevitable, but feel it’s fair only to start afresh on the new season when everyone understands the rules and customers can be charged for it.  “We didn’t realize we were liable and none have collected it,” Bell says. “We’re asking that it start in 2015 when we know all the details and can keep track. None of us feel it’s fair.” Senior Market Manager Mary Ellen De Luca said, “It works by charging the customer. The vendor isn’t holding that money now. They only work here five hours a week. Most aren’t bricks-and-mortar stores. It only makes sense to inform people and begin fresh.” The market was started by area growers in 1987 and is mutual benefit corporation under state law, says De Luca. Oregon considers such organizations to be nonprofits, according to the Attorney General’s website. The market, says De Luca, was not set up for profit and only pays expenses and salaries. It has planned to file for 501(c)(3) status with the federal government, she adds, but hasn’t gotten around to it. However, says Kanner, the food and beverage tax is being applied to vendors, not the market — and the city ordinance makes no reference to who holds the business license. “That’s irrelevant,” he said. During an exchange of letters this fall, the city asked for a list of vendors who sold prepared food at the market this year, but the market only recently provided the list, while also asking the city for deferral of the tax to next year, said Kanner in a memo to the council. At a Nov. 3 study session, the council seemed equally divided on the two choices, he said. Kanner’s memo listed arguments for each path. In favor of immediate enforcement, it said: • Postponement might seem to be playing favorites because it would be enforcing the tax on fixed-location operators but not on those at the market. • Shows city enforces its laws. • Businesses are responsible for knowing the law, without having to be notified. • Lack of awareness does not excuse non-compliance. •  Vendors acknowledged they are subject to the tax when it was enacted in 1993, sending the city a list of four vendors (including Four & Twenty Blackbirds and Blue Bunny bakeries) it felt fell under the ordinance and promising to update the city when new vendors who fall under the ordinance join the market. •  Lack of enforcement perpetuates “corrosive notion” that citizens only have to comply with laws when it’s brought to their attention. In support of postponement of the tax, Kanner said: • Vendors likely didn’t keep records at the market, so it will be hard to determine what they owe. In any case, it’s a “minimal amount” of money. • If vendors didn’t know they owed the tax, back payment would be “punitive rather than corrective.” • Only two of nine vendors got notice of non-compliance so it’s “not fair” to seek compliance from only two. • The vendors may not be able to pay because they weren’t aware of their liability. • The city hasn’t enforced the tax with market vendors, so the city “bears some culpability” in the situation. • Citizens may view the city as “cold-hearted and intransigent.” Kanner told the council that, unless it rules otherwise, staff will enforce the tax with vendors starting from Sept. 5. Rogue Valley Growers & Crafters Market also operates a Saturday market from May through October on Oak Street, but that market operates under a separate permit that does not allow for sale of prepared food or beverages, so the tax issue does not apply there. Proceeds from the food and beverage tax are split between the city parks account (20 percent) and for wastewater capital improvement projects (80 percent). The council meeting begins at 7 p.m. Tuesday, Dec. 2, in the Council Chambers at 1175 E. Main Street. The food and beverage tax item is towards the end of the agenda .  Reach Ashland freelance writer John Darling at [email protected]. http://www.dailytidings.com/article/20141129/NEWS/141129833 © 2015 Copyright © 1995-2011 Crain Communications Inc. All Rights Reserved. Terms of Use Privacy Statement -->