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Stafford says audit recovered about $1.39 million in misallocated local sales tax
Summary
City leaders presented results of a sales-tax allocation audit that identified $1,392,361 in recoveries from eight businesses; the audit contractor’s fee is 28% of recoveries under the contract.
A city council member reported that a private audit recovered $1,392,361 in local sales tax that had been misallocated to other jurisdictions, and that the contracted auditor will be paid 28% of the recovered amount.
The council member reading the audit summary told the council and public that Avenue Insight identified the misallocations for eight Stafford businesses and recovered back pay dating as far back as 2021. "In accordance with the terms of the contract, Avenue Insight will receive 28% of the recovered amount, which totals $389,461. The net gain to the city after this reimbursement is $1,002,900," the council member said.
The council member also said state rules limit recovery to a three-year lookback: "Up to 3 years is what's permitted by the state comptroller," the official said.
The presentation prompted several council and public comments thanking Stafford Economic Development Corporation volunteers and staff for initiating and supporting the audit. One member of the public suggested the city examine whether the contractor's fee could be shifted to the party that originally misreported the tax; the city attorney replied the contract and facts would determine whether that is possible and that staff would review the question.
Council members asked staff for more time to analyze the audit details. The mayor indicated he would return this item to a future agenda so staff and council can review the underlying data, broader scope items listed on the agenda, and whether to expand the audit to additional revenue categories (telecommunications and energy sales) after further analysis.
Why it matters: The recovery increases the city’s general-revenue balance by roughly $1.0 million after the auditor’s fee, and council discussion signaled interest in whether audit scope should expand to other revenue categories now that exemptions have changed at the state level. Council directed staff to return with more detailed analysis before taking additional steps.
What’s next: Staff will analyze the audit data and return with a fuller report at a future council meeting; the council asked city finance and legal staff to examine options for recouping auditor fees from responsible parties where contractually or legally possible.
