Tax flap could sink farmers market
By Heather Rutz | Monday, June 08, 2009

From The Lima News:

LIMA - One of the downtown's most popular summer events may be on its way out of town over city tax policy.

Farmers market vendors receiving letters from the city Tax Department about the possibility of paying income tax on their profits, may locate outside the city if the issue can't be resolved.

The city does not collect or provide refunds for amounts less than $5. However, the vendors are doing business inside the city limits and so should be paying the tax, Tax Supervisor Chris Fast said.

Downtown Lima Inc. Executive Director Fred Barrington and Joanie Kabara, who coordinates the market with her husband, Rick Kabara, said their research shows other communities don't tax their farmers market vendors. Barrington has been unable to determine if other similar vendors operating during special events downtown also pay taxes.

Most vendors don't make enough on Saturday mornings to make it worthwhile to file paperwork with the city and maintain records, Joanie Kabara.

"In fairness, if we're going to pay, everyone should have to pay. They should have let us know ahead of time," Kabara said. "Vendors said if they have to file paperwork, they're not coming back. They've already told us that. That was flat-out from all of them."

The city has never asked market vendors before to pay taxes. Publicity about the market this year led the department to send letters to vendors, Fast said.

Barrington is consulting with an attorney to see if the market vendors can be lumped under Downtown Lima's status as a nonprofit, exempting them from the tax. Barrington may also approach City Council about amending the city's taxation ordinances.

"It's not a very friendly way of doing things," Barrington said. "These people don't make a lot of money. It's a hassle to fill out the paperwork. I've been told they plan to go somewhere else. If we don't have something done in a couple of days, we're going to have to take a look at canceling the thing."

View article at The Lima News