RICHMOND, Va. -- A group of Richmond restaurant owners demanded their money back from the City of Richmond. The Virginia Restaurant Association said the City of Richmond has accrued at least $2 million in unfair or incorrect meals tax late fees against at least 30 businesses over the years.
The owners of Latitude Seafood, Philly Vegan, Beauvine Burger, Richbrau Brewing, Helen’s, ZZQ, and Eat Restaurant Partners which runs more than a dozen Richmond restaurants like Pizza & Beer of Richmond, Boulevard Burger & Brew, and Osaka Sushi & Steak, gathered at the Tobacco Company Wednesday for a press conference. They shared similar stories about how they've been harmed by the way Richmond’s finance department collects the meals tax.
CBS 6 has been investigating these issues and sharing restaurant owners' stories since the beginning of the year. Many restaurantuers said the city failed to notify them of a missing, late, or incorrect payment and then applied penalties and interest, again without tell them.
The 10% late fees would rack up month after month, snowballing into tens of thousands of dollars and even hundreds of thousands of dollars in some cases.
Mike Byrne, with the Virginia Restaurant Association, said the issues stemmed from mismanagement in the finance department, a lack of transparency, and basic accounting failures.
His group is calling on the city to refund or clear what he considered unjust late fees for all affected business owners.
“We want our money back, the penalties and interest. Everyone here pays the meals tax. That's a given. But the penalties and interest are unforgiving," he said. "The common thread is money, not the 7.5% current meals tax we collect and pay, but the incorrect and out of control penalties and interest, mismanagement, and lack of transparency process by the city's understaffed and outdated finance department.”
Lisa Ann Peters, who owns The Locker Room in the Forest Hill area, said her issue dated back to 2017 when the city claimed she was late on one meals tax payment.
But — like many others have previously shared — she said the finance department never told her about the delinquent balance. After years of monthly late fees, her outstanding balance grew to $12,000.
She didn't find out until 2020.
“Someone did show up at the door and said, ‘If you don't pay this amount, we're gonna shut you down,'" Peters recalled. "So yeah, you kind of live in fear."
To this day, she said the city still hasn't cleared her balance, making her ineligible to renew her business license.
"This is a foodie town. This is a great town to go to restaurants and breweries, vegan, barbecue, you name it. There is an amazing selection here," she said. "But financially, it’s risky. And it feels mafia-esque in that you don’t know what they’re going to charge you, when they’re going to charge it, and if they’re going to shut you down.”
Byrne also talked about how his group worked with lawmakers to get a bill introduced by republican senator Bill DeSteph in the General Assembly that would require localities across Virginia to notify taxpayers of delinquent balances among other things.
"Our point is that if you're going to have a meals tax, it's got to be administered fairly and equitably, which it has not been in the City of Richmond," said Kyle Wingfield, a tax attorney with Williams Mullen, in support of the bill.
Richmond City Council voted in 2018 to raise the Richmond meals tax from 6% to 7.5%. Richmond Mayor Levar Stoney introduced the tax increase as a way to fund Richmond Public Schools. The meals tax was previously hiked in 2003 as a way to fund a performing arts center in Richmond.
Since restaurant owners began speaking out about meals tax issues earlier this year, city leaders and council members have proposed several solutions including amending the city code to improve the application of tax payments and updating outdated billing technology.
CBS 6 has reached out to City Hall for a response to the restaurant owners' demands and will update this post once it is received.
This is a developing story, so anyone with more information can email newstips@wtvr.com to send a tip.
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