RICHMOND, Va. -- Ever since Kevin Grubbs, co-owner of Latitude Seafood Co., went public with his frustrations over Richmond's handling of the meals tax, he said dozens of other restaurant owners have shared similar stories.
“I mean, there's so many people that are affected that it's shocking," Grubbs said in an interview with CBS 6. “We've had some people say, maybe we should see who isn't affected, because it'd be a much smaller number.”
CBS 6 first reported on Grubbs' plight earlier this year.
He said he was late on one meals tax payment during March 2020, when the city was offering an amnesty program for meals tax late fees during the pandemic. However, Grubbs was unaware that the program did not automatically apply to all restaurant owners; it required them to apply.
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Restaurant owner calls Richmond 'completely immoral' over $68,000 late fee
Grubbs said the finance department never told him his payment was considered late and began accruing late fees. He said he continued remitting his usual monthly taxes, but he didn't realize the city's finance department was taking those payments and applying them to an outstanding delinquent balance that he didn't know existed.
“I had no idea they were taking it and putting it to prior months. I didn't know that. So that basically never cleared, so every month accrued a 10% penalty," Grubbs explained.
That caused him to fall into a cycle of delinquency, with penalties ballooning years later into $68,000.
Grubbs appealed the massive balance as an error, but the city denied his claim after taking a year to investigate. Ultimately, Grubbs said he paid the balance after the city threatened to raise it even more.
After CBS 6 gave a voice to Grubbs and several other restauranters who came forward with the same concerns, Richmond is proposing systematic solutions.
“I think for the future, it's great what they're doing. Like what they're implementing, had it been the case, there would be no problems," Grubbs said.
On Wednesday, a Richmond City Council committee advanced legislation that would amend the city code in a way that allows the finance department to apply current tax payments to the respective month the taxpayer is submitting payment for – instead of applying those payments to a delinquent balance by default.
Essentially, it allows the city to separate delinquent accounts and current accounts – which it was not previously doing.
"We hope that this will clear up cases of whether it's confusion or a sense of snowballing penalties and interest," said Richmond's Chief Administrative Officer Lincoln Saunders, who proposed the change to councilmembers in a recent memo following the meals tax fallout.
During the meeting, councilmembers including Nicole Jones (9th District) gave credit for the action to business owners who spoke out.
"You have business owners that have come forward, but then you also have business owners that don't have that capacity, and had it not been for the community really taking charge and stepping up and posting and doing all those things, they wouldn't have been heard," Jones said.
Council committee members also requested that the administration communicate with impacted business owners about the incoming changes.
"We have a list of who was sent delinquent notices, so we should have the ability to then go out to all these restaurant business owners and say, 'Look, we're trying to reconcile what happened and help you out,'" said Councilmember Katherine Jordan (2nd District). "I think we're getting back on path."
The council committee voted to recommend the proposed legislation to the full body for final approval.
Council President Kristen Nye (4th District) highlighted the measure as a positive step forward, but added more work needs to be done to address internal challenges within the finance department.
“We have lots of other things that we need to address— some legislatively, some just internal, staffing, training, and we really, really need to improve our communications," Nye said in an interview with CBS 6. "I know there are staffing shortages, and I know that our software's very outdated, which is causing a lot of these issues. However, we need to find some solutions."
In a recent memo, Saunders also outlined some administrative improvements to the overall tax collection process including transitioning to an online billing system for meals tax collection, reducing fees for penalties and interest on personal property taxes, and establishing business cafes in an effort to strengthen relationships with business owners.
Back at Latitude, Grubbs said he supports the changes for the future, but he's still waiting for the city to fix mistakes from the past.
Even after meeting personally with Saunders and Nye, he said the city hasn't made any progress on rectifying his $68,000 payment. And if they end up keeping his money, he said he's moving his restaurant out of Richmond.
“Until I see something, I don't believe it -- Not from the city. They're very untrustworthy, and I stand by that," Grubbs said.
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