Payson will start imposing hefty permit fees on any out-of-town business selling goods on the roadside.
Town officials recently discovered that the town has lost out on huge chunks of sales tax it could have collected from roadside sales of cars, RVs, spas, patio furniture and a host of other goods peddled by out-of-town businesses.
“Recently town staff learned that the prevalent practice is for retailers to offer their goods for display and actually conduct the sale in their respective home city, thus the Town of Payson is not receiving any tax revenue. This practice potentially puts local businesses at a disadvantage,” Acting Planning Director Ray Erlandsen said.
The town imposes a 2.2 percent sales tax, which provides about one-fifth of the town’s revenue.
Previously, the town simply required a $50 temporary conditional use permit when someone wanted to sell goods along the highway. Town staff had assumed the town was getting the sales tax from those sales until several complaints prompted an investigation.
Instead, sales people would generally make the sale on the spot — but then send people to another location to complete the sale. As a result, any sales tax would go to the town in which the business was located. One early case involved a Star Valley car dealership, which previously sold cars on weekends in Payson.
However, the shift would not affect that dealership — which now sets up in the casino parking lot. That arrangement still sidesteps Payson sales tax, since the town doesn’t collect sales tax on any activities on tribal land.
However, the big RV sale this past weekend could represent the last such impromptu sale. Erlandsen said he won’t issue any more permits for sales events until the new policy is in place.
The new system will charge potentially hefty fees, depending on the average value of the goods offered for sale. The permit fee is intended to recover the potential sales tax, even if the business then fails to report the sales as having taken place in Payson. If a given business does report its sales tax for the special event in Payson, the cost of the fee would drop to $50 in subsequent applications, said Erlandsen.
The fees would raise sharply with the cost of the goods offered for sale. For goods worth $100 to $500, the fee would be $100. For goods costing $10,000 to $25,000, the fee would rise to $2,500. For goods costing more than $1 million, the fee would be 10 percent of the price of each item sold.
The Payson council unanimously approved the new fee schedule at its Thursday council meeting.