PORTERDALE -- The chairman of the trustees for the Covington Elks Lodge asked the Porterdale City Council on Monday night to waive a penalty that is the result of the lodge not paying its city excise tax on the sale of mixed drinks for the past three years.
Trustee Chairman Ray Edwards told the council that the Elks Club was not aware that it owed any excise tax and expressed concern about a 1.5 percent per month penalty that the city now says the club owes in addition to the back taxes.
According to the state Department of Revenue, the excise tax of 3 percent on mixed drinks is charged by the local jurisdiction; the state excise tax on distilled spirits is paid at the wholesale level.
City Manager Bob Thomson said the Elks Club should have remitted the excise tax on its own to the city, but Edwards said the Elks Club never knew it owed a local excise tax until the treasurer received a copy of the city ordinance in February informing them of the tax.
The Elks Club Lodge is not the only establishment in Porterdale that is in arrears on its excise tax payments. City Clerk Judy Johnson said the Porterdale Bar and Grill has not made an excise payment since new owners took over in December. She also said that Jimbo's Grill at the Mill had not paid its excise tax since receiving its pouring license in July. The Oaks golf course is current on all payments, Johnson said.
The excise tax on mixed drinks is due by the 15th of each month. Johnson said a typical monthly payment would be in the $90 range.
Monday night, Edwards said the members now know that the tax is owed but asked that the late penalty be waived out of consideration of the Elks Club's nonprofit status.
Edwards also asked that the city reduce the cost of a pouring license for distilled spirits for the Elks Club, citing the club's nonprofit status and community service efforts. Edwards pointed out that Elks Clubs in other counties pay reduced license fees.
The City Council is scheduled to discuss Edwards' requests at a work session Tuesday night at 6:30 at City Hall.
In an interview Wednesday, Edwards said the lodge pays $500 for a beer and wine license and $2,500 for a pouring license for distilled spirits. The lodge has not yet paid the $2,500 for 2012 in full but is paying for the license in quarterly installments, which the city has allowed.
Edwards said he believes the $2,500 license fee is too high for a nonprofit to pay.
"We'll be lucky to sell $2,500 worth of liquor in a year," he said.
He also acknowledged that the Elks Club owes the back excise taxes and will pay them. He said the lodge will have to do some research to determine how much is owed.