RICHMOND, Va. — An external audit that the City of Richmond said was happening, which would have provided the city with direction on ensuring business owners who overpaid taxes get their money back, never actually happened. Now, an in-house audit is underway to address the longstanding issue, further extending the process of resolving a time-sensitive problem.
The issue at the center of the audit dates back to April 2022, when the city's inspector general opened an investigation into allegations that the Finance Department was failing to refund tax credits to business owners. Over the years, CBS 6 has heard from multiple people who reported they discovered a credit on their account but were not informed about it by the city.
A final inspector general report was never published for reasons that remain unclear. A draft version of that report later obtained by CBS 6 found that between 2017 and 2022, Richmond wrote off $3 million in credits after they expired due to a 3-year statutory limit. That money was then converted into the general fund, the report said.
The draft report did not conclude the city was in violation of the law but cited a confusing process in how the finance department handles refunds and credits.
In response to the investigation, the city council passed an ordinance in March 2024 directing the finance department to notify taxpayers within 90 days of a business tax credit being identified. Since then, the city has not been able to answer how many credit notifications it has provided, aside from 151 meals tax resolutions.
The city had said an external audit was underway to identify all remaining credits and that taxpayers would be notified once it concluded.
"Once that audit concludes and Finance has determined which accounts have credits, those account holders will be notified within 90 days," a city spokesperson told CBS 6 in June 2025.
In June 2025, the city received a "draft" of that audit, but it did not include an analysis of tax credits. In September 2025, the city said a "final" version, to be completed at a later date, would include the credit analysis.
Since then, CBS 6 has checked in with the city multiple times asking for the final audit. In March 2026, after CBS 6 submitted a Freedom of Information Act request for the final audit, city spokesperson Michael Hinkle confirmed the "draft" audit was actually the "final" audit, meaning there was never a tax credit analysis.
"There was some confusion over the naming of that document as a 'draft,' and, with the contract being managed by individuals who are no longer with the City, there was a misunderstanding of what we would/would not receive," Hinkle said in an email.
CBS 6 followed up to ask how many tax credits have expired since March 2024 without residents being notified. Hinkle said he was unable to provide that data before this story was published.
On Wednesday, CBS 6 asked Mayor Danny Avula about the delays in resolving the tax credit problems.
"Are you concerned about how long it's taking to get a resolution here, considering that these credits expire after three years?" reporter Tyler Layne asked.
"I think we'll get it right. As I've come to say, almost every week now - this is a 'look for it, find it, fix it' moment, right? We are addressing issues that we know have come up on past audits. Our internal auditors are in the midst of that audit that should wrap up sometime this summer. We've already identified 151 people, and we've notified them of tax credits that are coming their way, and we'll keep at it. So I'm confident in the work that the auditors are doing. We are obviously building our team and building the machinery. We just brought in a new manager of revenue a few weeks ago. And so we're working swiftly, and we're going to make sure that we get it right for the folks who are going to deserve that tax credit," Avula said.
"Do you know whether credits are actively expiring as you still work to find the resolution?" Layne asked.
"I don't know the exact answer to that. I need to talk to the team and figure out what the timeline is for expiration and see if there's a way that we can prioritize those that are nearest expiration," Avula said.
Richmond City Auditor Riad Ali confirmed his office is working on an audit to determine whether finance is complying with the requirement to notify taxpayers within 90 days of the identification of a credit. Beyond that, he said the audit will attempt to quantify how many tax credits exist, what they amount to, and how many have expired without being refunded or applied.
CBS 6 is committed to sharing community voices on this important topic. Email your thoughts to the CBS 6 Newsroom.
📲: CONNECT WITH US
Blue Sky | Facebook | Instagram | X | Threads | TikTok | YouTube
