Investigation into Richmond’s Finance Department Ongoing

RICHMOND, VA – It’s been three years since the Richmond Inspector General’s office began looking into complaints about the finance department’s handling of tax credits, but there’s still no official report available.

However, CBS 6 managed to get a draft report that describes the process as somewhat chaotic—essentially, a confusing situation around overpayments that taxpayers weren’t informed about.

The inspector general’s office, tasked with checking for waste and fraud at city hall, pointed out back in April 2022 that the finance department failed to notify taxpayers about meal and business license taxes. After a long three years, they noted that credits had come from collecting tax funds and adjusting taxpayer accounts.

Several Richmond business owners told CBS 6 that they unexpectedly found credits due to overpayments, but they were never informed. They discovered these credits while addressing unrelated tax matters, and refunds took a few years to arrive.

A finance employee, who asked to remain anonymous, expressed frustration to CBS 6 over the delays in the investigation, feeling that their concerns were overlooked.

City Councilman Kenya Gibson mentioned he hadn’t reviewed the report yet, but he feels it’s essential for the public to see it—especially after the finance department mistakenly sent out duplicate real estate tax bills earlier this year.

“Sending duplicate invoices often leads to duplicate payments. It’s concerning that the city might be overcharging people while struggling to manage the ongoing credit payments,” Gibson noted.

The draft report, dated neither here nor there, reveals that legally the city wasn’t obligated to notify taxpayers about claim mishandling by the finance department regarding meal tax and business license tax credits.

That said, the report highlighted some confusion, particularly around advice from the City Attorney’s Office. For instance, an email chain from November 2021 showed a property executor asking the finance department about unpaid taxes, only to find out there was a credit of $629. The attorney advised not to issue a refund unless it was specifically requested, adding to the confusion about how such credits and refunds should be managed.

Furthermore, the report indicated conflicting advice about whether taxpayers needed to apply for refunds. While the City Attorney’s Office indicated applications were required, other areas in Virginia reported that no application was necessary.

Between 2017 and 2022, the finance department amortized over $3 million in credits, which was then placed into the city’s general fund.

Building trust with residents is crucial, Gibson emphasized. “If they’re owed money, we need to pay it back,” he said.

The draft insisted on establishing clear written procedures for reimbursing overpaid taxes. Additionally, the city lawyers suggested a policy to ensure official legal opinions and clear procedures to minimize confusion in the future.

Former Inspector General James Osna explained at a committee meeting last year that the slow release of the report stemmed from advice suggesting he couldn’t investigate the issues at hand. In response, City Attorney Laura Drolley stated that inspectors have the authority to look into tax overpayment handling.

Regarding compliance with legal requirements, Drolley insisted the city had acted within the law.

CBS 6 reached out to the Inspector General’s Office under new leadership to check on the investigation’s status but hasn’t received a response yet.

In response to the inspector’s findings, city council passed an ordinance in March 2024 mandating that the finance department inform taxpayers within 90 days about any tax credits, inviting them to apply for refunds.

A city spokesperson mentioned that to date, officials have communicated with 151 account holders about meal tax refunds.

Even so, it’s been over a year, and the city still lacks clarity on how many taxpayers have credits in their business license accounts. An external audit is currently assessing possible credits.

“Once that audit wraps up and Finance identifies which accounts have credits, those account holders will be informed within 90 days,” city spokesman Ross Catrow stated.

Gibson noted that understanding whether policies are being followed hinges on concrete evidence of communication and credit issuance. “Until we see that, it’s hard to gauge compliance,” he added.

CBS 6 also inquired with council leaders about whether they received the inspector’s report and any related data regarding compliance with the March 2024 requirements.

Council Vice President Katherine Jordan was unavailable for comment, while Council President Cynthia Newville didn’t respond to the inquiry.