Although a Searcy chain restaurant has closed its doors, that’s not stopping the Searcy Advertising and Tourism Promotion Commission from going after the “thousands of dollars” in advertising and promotion tax revenue it owes.
“We have a lien that has been filed” on Hwy 55 Burgers Shakes and Fries, 212 E. Beebe-Capps Expressway, City Attorney Buck Gibson said at Tuesday’s regular meeting before asking the commission to “authorize me to ... obtain a lien search so that we can at least have what might be out there.
“My experience in dealing with many businesses who have been in distress over the past is that there are likely tax liens, both state and federal perhaps, we just don’t know,” Gibson said. “The question is whether the commission wishes to expend the funds to find out where you are in line or simply let this take its course.”
A&P Commission Chairman Chris Howell asked Gibson if “we have an estimate on how much they owe?” Gibson said, “It’s in the thousands of dollars, and those are estimates because they never filed any returns.”
Gibson said he and the commission’s contracted certified public accountant, Tim Blansett, have made “an estimate and if I’m not mistaken it is $2,500 a month that they would owe. They have been owing since the tax was imposed, so it’s a significant amount of money. They never filed a return.”
According to Searcy Code Enforcement, Hwy 55 obtained its city business license in February 2018 and obtained its A&P license Dec. 16, 2019. The Searcy City Council passed the A&P tax (1 percent on prepared foods and 3 percent on temporary lodging) in March 2019.
Howell asked Gibson if the amount would be changed if the business came back with its sales numbers and they were significantly less than what the commission has.
“There is a process by which they can substantiate what their sums owed would be,” Gibson said. “I think that is permitted by the ordinance, the statute and is certainly consistent with our past practice.”
He said the business never responded to anything that was sent to it by the commission to substantiate an amount or pay what it owed.
“I received one phone call from someone who reported to be a representative of the company in the past 24 months and they indicated ‘Gee whiz, we’re really sorry, we’re going to get on top of this,’ and they never did,” he said. “I don’t know what else to say. I think it’d be worth a couple hundred dollars to do a lien search to determine what the universal potential claims is.”
Gibson said he would do a U.S. Uniform Commercial Code lien search to see what there might be on the personal property and he would do a search of real estate records to find out what there might be on real property. He said he would estimate that the cost would be about $300 ($250 for title search and about $50 for the UCC search).
“This is the first business that we dealt with where we actually got to the point of having a lien, that it’s closed down and now there’s a for sale sign in front of the business,” he said. “So i think it’s worth the legwork to at least see where we might fall in line.
“Until we know or we can evaluate where we fall in line, we are just throwing darts in the dark.”
Howell asked Gibson if it was known if Hwy 55 ever charged the tax. Commissioner Tommy Centola said “yes.” Commissioner Mike Chalenburg added that he and his wife had eaten there on occasion before they closed down and “at least part of the time when I calculated, it was adding the 1 percent.”
“They collected the money from people in our community and kept the money,” Gibson said. He said he has no sympathy for the business, but “I’m sympathetic to the people who may have lost their jobs when the business closed.”
Centola then made a motion for Gibson to do the lien search and it passed unanimously.
Despite Hwy 55 not remitting its tax revenue, Blansett said the A&P fund had $2.146 million in the bank at the end of October compared to $1.078 million last year, “a pretty significant increase.” The amount of unallocated money is $1.955 million, he said.
For October, the A&P tax brought in $121,731, bringing the yearly amount to $1.108 million. Blansett said the amount paid out on A&P grants in October was $5,596. Operating expenses during this period were $2,200 and $1,000 was the amount of interest income. Compared to last year, Blansett said the funds are up 20 percent.
“For the year to date, we’re up 34 percent compared to 2020, so overall collections are going along pretty strong,” he said.