City officials clarify restaurant tax

The city of Cape Girardeau has begun collecting more revenue after changing the paperwork for its 1 percent restaurant tax.

The new form, which was due to City Hall Sept. 20, is meant to ensure restaurateurs calculate their gross receipts correctly. Many local restaurants had been paying incorrect tax on the food and non-alcoholic drinks they sell, say city officials.

Since 1983 the city has used this money and the money it collects from similar taxes on hotels to promote tourism. That includes paying off general obligation bonds for the Show Me Center and River Campus, and funding the Convention and Visitors Bureau.

"It became apparent that not everybody understood gross receipts should be included," said city finance director John Richbourg. He said he has no way of knowing which restaurants paid the correct amount in the past and which did not. Determining that would require a widespread audit.

But even with the new forms, Richbourg said, "not everyone is submitting it correctly and we'll have to work with those people."

Hypothetically, if all restaurants were incorrectly reporting receipts, Richbourg calculates, there would be an annual difference of $102,500 in revenue. The city doesn't expect to make up that much money, but wants to make sure all restaurants pay the same.

Some, though, are not happy with the stricter enforcement. "I've been paying it for years, and I've always understood it as 1 percent of the sales in the restaurant, not 1 percent of gross receipts. Everyone has been fine with that for years," said Mark Dirnberger, owner of Bella Italia restaurant. "They say they're trying to straighten things out, but it seems like they're trying to squeeze more blood out of a turnip."

Dirnberger believes the city is wrongly taxing other tax money. He added that he continued not to pay the proper amount the first month of the new form.

The tax breaks down this way: if a restaurant sells $100 worth of pasta dishes it is expected to pay 1 percent, not only of that $100, but also of the 6.975 percent state sales tax according to the ordinance. The difference comes to less than $.07 on the $100.

Some restaurant owners are applauding what they say is a step toward uniform collection. "The key is there was confusion out there and the new form makes sure there is equity," said Joel Neikirk, operations manager for MidAmerica Hotels Corporation which owns and operates Burger Kings and hotel restaurants in Southeast Missouri and three other states.

Neikirk said his restaurants have always paid the correct amount, but he understands how many wouldn't.

"I probably wouldn't have figured it out if I wasn't one of those ones who is trained as a CPA," he said. "A lot of owners pay accountants to do the job and most of them do a good job, but they're not paid enough to go down to city hall and study a copy of the statute."

The new monthly restaurant tax form has a copy of the statute printed on the reverse side. Richbourg also sent out a clarification letter on Sept. 18 telling owners the new form represents a "clarification" not "a change."

Barry Robinson, owner of Cup 'N' Cork, admits he may have been one of the wrong ones in the past, but won't be in the future. "I guess several of us were doing it wrong from the beginning," he said. "For me it's probably only $3 to $5, but for a bigger restaurant it might mean $50 or $100."

tgreaney@semissourian.com

335-6611, extension 245