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City accepts special audits of ChibaHut and 7 Iron Social; ChibaHut shows months of noncompliance and tax-return discrepancy flagged
Summary
The ALRC accepted two special finance audits. The internal-audit unit found ChibaHut out of compliance for 11 of 29 audited months and flagged a mismatch between POS sales and Wisconsin Department of Revenue returns; 7 Iron Social’s operator announced closure while disputing the audit process.
The Alcohol License Review Committee accepted special internal audit reports on Aug. 20 for two licensed establishments: ChibaHut and 7 Iron Social.
Kola (internal audit) told the committee that the audit of ChibaHut covered a 29-month period and found the establishment was not in compliance for 11 months; the finance unit reported an average percentage of alcohol-to-gross-sales far above the benchmark used by the committee. The audit also identified an apparent discrepancy between the establishment’s point-of-sale (POS) records and Wisconsin Department of Revenue sales-tax returns. Audit staff said they shared the discrepancy with the city controller’s office and the city attorney, who will determine whether to refer the matter to the Department of Revenue.
ChibaHut management told the committee the POS/DOR difference was driven in part by third-party delivery sales that are recorded differently for tax reporting. The licensee said 25–30% of orders in some periods go through third-party services and are treated differently for sales-tax remittance.
The audit of 7 Iron Social covering the same period showed higher monthly alcohol percentages and several months over the committee’s threshold. Representatives of 7 Iron told the committee they had experienced operational problems, had spent significant funds on build-out and security and, in a strong statement to the committee, announced they would close the venue. The owner said poor handling of the audit request and prior enforcement contacts had severely harmed the business.
Committee members thanked audit staff for the reports and noted progress at other establishments (the police reported improvements at some venues after management and police collaborated). Miss Carter moved to accept the audit reports; Alder Glenn seconded; the committee adopted the motion with no recorded objection. The committee also asked staff to follow up on the POS/DOR discrepancy with the city attorney’s office and controller’s office.
