City owed $507,000 in unpaid gambling tax

Spokane Valley businesses owe the city more than $507,000 in unpaid gambling taxes from 2007 to 2010, but city finance director Mark Calhoun said he doesn’t really expect to see any of it.

“I think in large part those businesses aren’t in business anymore,” he said. “Frankly, you reach a point where the likelihood of collection is remote at best.”

The city charges a 5 percent tax on gross receipts (minus prizes) on bingo, raffles, punchboards and pull tabs. The tax on card games is 10 percent of revenue. Businesses are required to pay taxes quarterly. Calhoun said he is not allowed to identify which businesses never made their tax payments and doesn’t know what was done to try to collect the debt before he took over the finance department last year.

“I can’t speak to what happened in the past,” he said. Calhoun does know that the debt to the city has been written off, but remains on the books in case some sort of collection is possible. “It was recognized as a bad debt expense for each of those years by the city.”

Gambling tax revenue peaked in 2006 at $893,795 and dropped steadily to $522,312 in 2011. The biggest year for unpaid taxes was 2009 at $202,942. The city didn’t receive $2,054 in gambling taxes in 2011. If a business is late in making a payment, it is charged interest.

Calhoun said he currently has only one business that is behind on its gambling taxes. He sent a reminder letter that generated no response and has since sent a second letter with a copy to the state gambling commission. Calhoun said he is trying to balance collecting a debt while still allowing the business to continue operating.

“I’m not sure how this plays out,” he said. “It’s not the city’s intention to chase anyone out because they’re in arrears, but of course the city is interested in collecting the money owed.”