CHARLESTON, W.Va. — State officials are concerned that subcontractors operating under a primary state contractor may not be registering with local governments where they’re doing the work — possibly not properly paying local business and occupation tax.
The state Legislative Auditor became concerned about the matter when none of 12 subcontractors operating under wvOasis registered with the City of Charleston. That’s the big, interconnected computer system the state has implemented over a period of years.
So Legislative Auditor’s office became concerned that the cities of Charleston, Huntington and Morgantown may not be receiving hundreds of thousands of dollars in B&O taxes owed by businesses from state government projects.
Legislative Auditor’s staff presented findings on Sunday during legislative interim meetings.
“Many local government and municipalities may be unaware that subcontractors are operating in their area, as they must rely solely on the subcontractor to notify them, and have no other way of learning that the subcontractor is performing that work,” wrote Denny Rhodes, director of the Post Audit Division.
The Legislative Auditor concluded this may be happening because of a lack of explicit language in the general terms and conditions in the state Purchasing Division’s bidding documents
The Legislative Auditor recommended the Purchasing Division’s General terms and conditions be amended to include language to ensure firms notify subcontractors of their potential responsibility to register with all municipalities in which they will perform work and to pay all requisite taxes.
“By enacting this recommendation, the state, local governments and municipalities will be better protected should some legal recourse be needed to collect unpaid B&O taxes for work performed under a state contract,” Rhodes wrote in a memo to House Speaker Tim Armstead and Senate President Mitch Carmichael.