"When municipality comes on board, there is the initial start up cost," Forinash said. "You develop and test the paper return and electronic return process, and you modify the financial and reporting components in our processing software."
The tax department's sales tax system lumps businesses together on a statewide basis. When a city implements a new sales tax, officials have to create new jurisdictional boundaries within the system and identify businesses located within those boundaries and flag them as having to pay the municipal tax.
Forinash said this could get complicated when you have franchise or chain stores that pay taxes as a full company but only have certain locations that have to collect municipal sales tax.
"So this grocery store may have to charge this municipal tax while this other location in the grocery store chain does not," he said.
After the initial setup costs, the department has costs associated with data preparation, entry and verification.
"We have desk audit which involves error correction, refund information and technical assistance," Forinash said. "We also have some field audits as well, which also includes the cost of employees, equipment to select audit candidates, conduct reviews, put together records."
He said the department also has to field customer service calls from individuals and organizations that pay the tax.
While it does cost some money to provide these services, Forinash said it would be cheaper for the Tax Department to handle the processing instead of cities running it at the municipal level.
"We're set up to do that, that's the way it's set up to be, but at the same time there's the cost on our end to set up these taxes," he said.
While Charleston Mayor Danny Jones has said he is altering the city's pending municipal sales tax implementation and business and occupation tax reduction to offset the increased fee, Forinash said the department is willing to work with city leaders to implement their programs in the best way possible.
"Any fee the Tax Department is going to propose in this process its not going to be an obstacle to the success of these municipalities," Forinash said. "We feel that when an efficiently run system is able to work directly with the cities, the cities are going to see a great benefit to that relationship."
Contact writer Jared Hunt at busin...@dailymail.com or 304-348-4836.