By John Schaffner
Some of Sandy Springs’ largest corporations and the chamber of commerce have been meeting with members of the city’s administration to discuss concerns about whether or not the way the city calculates its occupation taxes is equitable—for both the city and the businesses.
Among the companies involved in the discussions—recently mainly through an attorney—are UPS, Newell Rubbermaid and Cox Enterprises, but even small consulting firms have become part of the discussions.
At issue seems to be the way the city calculates the gross receipts tax portion of the occupational taxes. Each company’s occupational tax is calculated in two ways as determined by Georgia law, according to Sandy Springs City Attorney Wendell Willard: on the gross sales receipts, which varies by business categories, and by the number of employees.
The gross receipts fee schedule varies from 50 cents per $1,000 to $2.20 per $1,000 based on a profitability ratio that was determined by the Carl Vincent Institute at the University of Georgia. Companies pay $13 per employee for every employee in addition to one.
While some businesses in the city believe the method of calculating that tax is unfair and inequitable, Mayor Eva Galambos contends the problem is merely a lack of clear understanding on the part of the businesses.
“We want to nurture our headquarters companies in Sandy Springs and we want more of them,” she said.
The occupational tax issue became a public discussion during the mayor’s “State of the City” address to the Sandy Springs Perimeter Chamber of Commerce on July 19. During a question-and-answer period, UPS Vice President of Corporate Public Affairs Victoria King asked the mayor whether the city’s tax policy might cause major international businesses to move their headquarters out of the city.
She reminded the mayor that similar tax burdens have kept downtown Atlanta from getting a major corporate headquarters since Georgia Pacific located there in the 1980s.
One goal seems common among Sandy Springs city and chamber officials, and even among many business leaders: “It is important for the health of the city for Sandy Springs to keep the major corporations located here,” said Rusty Paul, a former member of the Sandy Springs City Council and a member of the chamber board.
“There is nothing illegal or improper about the way the city is calculating its gross receipts tax,” said Paul, an attorney with Arnall Golden Gregory law firm. “But the situation here is unique. The situation is more complicated for Sandy Springs, because most Georgia cities don’t have the headquarters of many international corporations.”
Paul said it is one thing when companies have $2 million to $4 million in revenues. “When you have companies that generate multi-billions of dollars of revenues, you can be talking about millions of dollars in taxes,” he said. “The question we are seeking to resolve is: What is a fair way to tax for the services the companies receive?” Paul said the concern is that “there may be an imbalance.”
In answering King’s question at the SSPC meeting, Galambos stated: “In each case where there may be a question, we want to sit down and work it out and ensure it (the tax) is fair to the corporations as well as to the city.”
UPS’ King said she was encouraged by the mayor’s comments. “What she said was the very most I could have expected.”
Members of the city’s government, SSPC board members and officers and representatives have been meeting on the issue for some time, according to both chamber and city representatives.
City Council member Ashley Jenkins has been involved in some of those meetings and said she and Paul have been “working on the mayor” to ensure she understands the concerns of the major corporations headquartered here.
Willard and City Attorney Cecil McLendon said the city set up a policy several months ago on how to handle informal reviews with individual companies on how their taxes are calculated. They indicated that so far they feel the meetings have had good results.
Paul recalled that when Sandy Springs became a city, it took Fulton County ordinances and “passed them in mass, knowing we would have to tweak them over time.”
Both Willard and Paul referred to a council decision last year related to Mirant Corporation, which had challenged the city’s occupational tax in court. The city won the court case, with the judge saying the city was taxing Mirant legally. Mirant’s Sandy Springs headquarters was where all the company’s sales were made. As a result of the Mirant case, the city chose to change the ordinance and place a cap of $400,000 that could be charged in gross receipts taxes that could be charged to any one company.
While that seemed a good solution, some companies with many subsidiary companies operating out of their headquarters here, question if that means the city can charge up to the maximum $400,000 in taxes for each subsidiary, which they say is unacceptable.