ST. LOUIS — Mayor Lyda Krewson and Aldermanic President Lewis Reed on Wednesday held up a back-tax settlement with a wireless telephone company because the firm won’t divulge its identity until the deal is signed.
Under the proposed agreement submitted to the city Board of Estimate and Apportionment, the company would pay the city more than $1.1 million in gross receipts taxes and penalties covering a four-year period and commit to paying in the future.
The company, which approached the city through the Bryan Cave law firm, would not have to pay taxes for nearly two additional years in which it had been operating in the city. The proposed deal was negotiated with lawyers for the city.
“Yes, I’d like to have the million dollars, especially now” with the city facing major revenue shortfalls due to the coronavirus crisis, Krewson said Wednesday via Zoom teleconference call.
But “it seems to me we should know who it is” before an agreement is approved, she said.
The mayor also expressed concern that the company also might owe other types of taxes to the city as well. She asserted that “they have to pay their other taxes that are due.”
Reed worried that without knowing the firm’s identity, board members have no idea if they might have a conflict of interest voting on the deal.
“We could have family members working there” or have received a campaign donation from the firm, he said.
He said he would refuse to vote on the proposal unless the company is identified. He said perhaps that could be done in a closed executive session at the board’s next meeting.
Reed and Krewson are on the board, the city’s top fiscal body, with Comptroller Darlene Green, who brought the issue to the panel. Green’s office worked with city attorneys on the agreement.
Barbara Birkicht, an attorney-manager for the city counselor’s office, said the city had no knowledge of the company before being approached.
She said the Bryan Cave attorney representing the firm initially offered to pay three years’ back taxes and the city sought five years’ payment since case law indicates that’s the statute of limitations on court action in such matters. The two sides agreed on four years, Birkicht said.
She said the Bryan Cave attorney has said the company’s identity will not be divulged to the city until the agreement is approved.
The proposed settlement, Birkicht said, allows the city to review company records and that if it has misrepresented any fact, the deal would be voided.
Birkicht said the situation is unusual. She said because the city had no knowledge of the company and still doesn’t know its identity, “I don’t have a way to track them or recommend suing them.”
Krewson said perhaps the city should hire a consulting firm to see if there are any other such companies evading taxes.
“Who else is out there like that?” she asked. “And how do we find those tax scofflaws?”
Green said she also wanted to take steps to get other companies that aren’t paying taxes to voluntarily come forward.
Birkicht said the state of Missouri and Kansas City have laws that set up rules for companies that voluntarily come forward to pay back taxes. Green said maybe St. Louis should pass one as well as an incentive.
Krewson also expressed concern that the proposed agreement bars the city from telling other taxing authorities about the deal unless required by law.
Green agreed to Krewson and Reed’s request to delay action on the agreement.
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