Local & State News

Penny tax dispute hurting small businesses

(Columbia, SC) – On Tuesday, Richland County is set to appear in court asking Judge Thomas G. Cooper to order the S.C. Department of Revenue to release penny tax revenue it is withholding from the county. The Revenue Department says it won’t release the money until the county brings its program into compliance with department standards; the county says the agency is overstepping its bounds.

diane_e._sumpter
Diane Sumpter – President & CEO of DESA

In this he-said she-said battle, here is what I say: The county and state need to find a way to address their concerns without withholding revenue from companies that are performing taxpayer-approved work.

Under our contracts, subcontractors are not paid until the prime contractor gets paid. That means if the Revenue Department doesn’t release revenue from the penny tax in July, our company will not get paid for the work we have already done. While larger companies may be able to sustain such a loss, we can’t. As my fellow small-business owners know, our coffers are not always as full as those of the big boys. We operate on a much tighter budget and a thinner profit margin.

In November, when my finance manager and I sat down to set the 2016 budget, we looked at our current and anticipated revenue and expenses. Revenue from penny tax projects was a key component. In fact, we hired a new engineer based on the contracts we had signed. Now, there is a chance that we may not collect the payment for the work that we’ve done and are scheduled to do.

For more than 40 years, I have been on the front lines as a voice for equity for minority business owners. As such, I am very familiar with the county’s poor track record of providing opportunities to minority businesses.

To address this, the county developed the small local business enterprise program, which became the vehicle to award more contracts to small and local businesses, many of which are minority-owned. Many of us saw the penny tax program as the first major opportunity to win substantive contracts with the county, thus growing our business and gaining capacity. That’s why I was such a strong advocate for the penny tax, spending my personal resources and my political capital to promote its passage. Now, if the Revenue Department’s efforts to withhold funds from the county are successful, my company will not be able to collect on the work that we’ve done, which is worse than not getting the work at all.

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Ms. Sumpter is president and CEO of DESA, a business services company located in Columbia; contact her at dianes@desainc.com.
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