An estimated $2.4 million to $2.6 million in outstanding business license accounts have not been collected in Long Beach, Calif., according to a two-year audit of the city's Business Relations Bureau.
In a new report, City Auditor Laura Doud pointed out that the business license tax, which average $383 per year, brought in revenue of $11.7 million last year.
But the software used to process business licensing is "extremely old and has limited functionality," explaining why the city could only offer an estimate of outstanding accounts. Doud also pointed to a lack of comprehensive policies and procedures for the collection process.
Of the 10% of accounts Doud's office sampled for the report, an estimated 87% of the accounts were more than 180 days old, with 39% being more than a year old. In addition, 93% of the accounts over 180 days delinquent showed that none of the steps - a call, a site visit or a notification - had been performed.
To complicate the issue, the software system in place permits the creation of a duplicate account if said business had an earlier year outstanding balance that was forwarded to the city's Billing and Collection Section. One of four accounts sampled revealed a duplicate account, meaning a quarter of businesses have outstanding accounts.
Renewing a business license follows this routine: after the one-year period of the license has expired, a ten-days-prior notice is mailed. If said account is not paid within 30 days, they are classified as delinquent and additional penalty fees are applied. Inspectors then attempt collections via a call, a site visit and then a Notice of Violation. After a certain period, the account then is sent to Billing and Collection Section.