Franchot going after amusement taxes

February 13, 2007|By Lynn Anderson | Lynn Anderson,Sun Reporter

State Comptroller Peter Franchot announced yesterday that his office will begin visiting and inspecting businesses with amusement devices such as video poker games and pool tables to ensure that owners are paying amusement taxes on the machines.

Franchot's office sent out warning letters to machine owners that had yet to set up tax accounts with the state last month, telling them that they had until Feb. 8 to do so. Failure to comply, Franchot warned, would result in possible audit, fraud penalties or criminal prosecution.

Revenue from coin-operated games, which are found in many Baltimore bars and neighborhood stores, is subject to a 10 percent tax on gross receipts. But during a recent review of licensed games in Baltimore, the comptroller's office discovered that although machine owners had registered the games with the city, they had not set up tax accounts with the state.

As a result, the city, which receives tax money through the state, could be losing as much as $11 million in tax revenue annually, according to a 2006 study by the Abell Foundation, a nonprofit organization that focuses on poverty issues.

"I want to level the playing field and ensure that everyone pays their fair share," said the comptroller.

Former Comptroller William Donald Schaefer told Abell officials that he did not have the staff to check on amusement-device owners. However, it was Schaefer's administration that sent out the first batch of letters - about 115 last fall - to amusement-device owners advising them that they had to set up tax accounts.

Franchot's administration followed up with a second batch of letters to those who did not respond to the first. As of Friday, Franchot said, there were 31 nonrespondents.

The effort has won the support of City Council President Stephanie Rawlings Blake and Councilwoman Mary Pat Clarke. Recently, the City Council delayed a vote on a bill that would have allowed for the expansion of such games in bars and stores. The bill is in committee.

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