A 60-year-old fence installation company honored in 2001 by the Springfield Area Chamber of Commerce as Small Business of the Year has been operating without city and county business licenses for months.
Carnahan-White Inc. co-owner Stacey Hammit said the company has been wrangling with the state over a proposed tax refund following a self-imposed state tax audit that ended in 2010. He told Springfield Business Journal last week the company is not struggling financially, but three civil court judgments this year totaling more than $60,000 were secured against Carnahan-White for money owed for services or products rendered.
And at least one competitor is miffed City Utilities employed Carnahan-White indirectly as a subcontractor through Neosho-based Branco Enterprises Inc. for work tied to the construction of the Boonville maintenance campus without proper licenses in place.
Licenses suspended Greene County Deputy Collector Leah Betts said Carnahan-White’s merchant license was revoked eight months ago after the Missouri Department of Revenue pulled its sales tax license identification number on Dec. 7 for lack of payment. The company also hasn’t had current licenses to conduct business in Springfield or Republic this year because of lien notices, Hammit said. State lien notices against the company totaled $58,644 when SBJ conducted a July 30 interview with Hammit at the company’s headquarters, 1845 S. State Highway MM.
“We asked the state to come in and do an audit, which most businesses would not do unless their books were clean and ours [were]. The reason was that there was a change in the law where you pay use tax on manufactured items,” Hammit said, adding the audit request was made because he believed the company had been overpaying its taxes. The audit, conducted between 2007 and 2010, according to a BKD LLP statement provided by Hammit, indicated Carnahan-White had estimated the return to be in excess of $74,000. Hammit said the return amount has been a moving target, and the BKD statement showed the most recent proposed tax return was $30,000.
Hammit said he decided last year to hold on to state taxes owed until he was paid what he was owed. A Missouri law passed in 2007 allowed retailers to no longer collect state sales and use taxes from manufacturers on exempt items.
He said a BKD tax specialist out of the firm’s Kansas City office, Robert Johnson, has worked with Carnahan-White in its state dealings. He said BKD did not advise him to stop paying the taxes.
“I elected … to not pay our quarterly taxes. I kept a running total of what we owed and what they owed me. The first quarter came through, business licenses were supposed to be renewed at the first of the year, but I hadn’t paid the last quarter [of 2012], so we didn’t have a clean bill of health,” Hammit said. “We are up to date now and will continue to be up to date.”
During the interview, Hammit presented copies of checks written to the Missouri Department of Revenue dated July 22 and July 23 totaling roughly $100,000 for use and withholding taxes and unemployment insurance balances that he said eliminates the company’s tax debt.
Little enforcement According to the DOR website WhoIsNotPaying.gov, Carnahan-White’s liens were still in effect as of Aug. 1.
Michelle Gleba, the department’s director of communications, who declined to disclose details of the private company’s debts, said when the department does not receive a sales tax payment from a Missouri business, there are specific steps it takes before a license is suspended.
Gleba said first the company receives a billing, or nonfile, notice, followed by an assessment notice. A lien is sent to the county recorder of deeds and the circuit clerk, and then a default notice is sent to the business before a final revocation notice is issued.
The process, Gleba said, varies depending on the gross sales of the business in question. According to DOR, state taxes collected of $500 or more per month are to be reported on a monthly basis, while taxes collected below $500 per month should be filed on a quarterly basis. Companies that owe less than $100 per quarter should file annually.
“We can assess a penalty for operating without a license. It is $500 for the first day and $100 each day after, up to a maximum of $10,000,” Gleba said.
Greene County Collector of Revenue Scott Payne said it is not uncommon for businesses to have their licenses temporarily suspended, but it is rare for a business to operate without a license for several months.
“Typically, what happens is a business will miss a deadline and receive notice and then it will catch up right away,” Payne said.
He said Carnahan-White’s $25 Greene County merchant license was automatically revoked in December after DOR notified the county there was a state tax lien in place for failing to pay sales taxes.
Payne said while it is a misdemeanor in the county to operate a business without a license, he’s never turned in a violation to the Greene County prosecuting attorney.
“We haven’t ever had a need to. People who operate businesses typically buy one. A $25 fee is not something too many people balk at,” Payne said, adding the office leaves it up to the state to pursue taxes owed.
Hammit said as soon as the liens are officially removed, he would get the company’s licenses renewed.
Level playing field While Carnahan-White’s taxes might be current now, one fencing competitor feels the lack of a current business license could have prevented the company from securing a roughly $150,000 public contract.
Robinson Fence Co. General Manager Tony Grigg said all companies considered for public projects should play by the same rules.
“In the fencing world, $100,000-plus projects don’t come along every day,” Grigg said, adding the fencing job would have represented roughly 5 percent to 8 percent of Robinson Fence’s annual revenue. He said the company was the second-lowest bidder for the Boonville campus, which included the construction of two new buildings for bus storage and maintenance.
He said around the first of the year an office manager from Robinson Fence contacted City Utilities to let them know about the tax liens and lack of a current city business license.
Grigg said CU was responsive and was said to be looking into the matter, but Grigg never followed up.
“We kept our business license current, plus all of the other requirements that were necessary to be able to perform on that project should we have been awarded it. In the spirit of fair competition, we want everyone to be on that same page,” Grigg said.
City Utilities spokesman Joel Alexander said on Aug. 1 general contractor Branco had been made aware of the issue months ago.
“Our staff informed them of the situation and any details from that point would have been worked through Branco, Carnahan-White, and the city,” Alexander said via email, of the project that was largely completed about a month ago.
Aside from the tax and licensing issues, Carnahan-White has lost three recent civil cases for not paying bills stemming from vendor services.
On Feb. 5, YP Advertising LP secured a judgment against Carnahan-White for $46,184, according to Greene County Court records. In separate actions in March, SMC Electric Supply and Spokane Forest Products Inc. were awarded judgments against the company of $4,650 and $11,648, respectively. Court records show the Spokane Forest judgment was paid in full in April.
Carnahan Fence Co. was founded in 1952 by Garnett Carnahan before being purchased in 1958 by W.E. and June White, who changed the name, according to CarnahanIronWorks.com. In 1964, Steve White, son of W.E., became a partner in the family business.
In 2001, the same year the company was named Small Business of the Year by the Springfield chamber, Steve White’s son-in-law Stacey Hammit, along with Hammit’s wife and White’s daughter Carrie, purchased the business. Six years earlier, Hammit began working as general manager for the company, where his brother, Kevin Hammit, also works as chief financial officer.[[In-content Ad]]
