RICHMOND, Va. (WRIC) — In a tight economy, the City of Richmond is finding itself paying nearly $500,000 in interest to one business.
8News has learned this is a practice that many companies do — overpay in taxes so the city has to reimburse them with interest.
A Richmond city spokesperson confirmed to 8News the city has made payments to a company because the company overpaid its taxes. The largest amount was four $475,000 from compounded interest.
The practice appears to be legal, but it is not what the city wants to keep doing.
“It’s something that has happened in other parts of the state, so we’re going to explore what legislative action we can ask for from the General Assembly,” City Councilwoman Kim Gray said.
It appears the city has fallen prey to this practice before, and in this particular case, the transaction has taken a toll on the city’s finances.
“Within one month, thinking we had a windfall of additional funds and then it just got eaten up with the tax overpayment, so apparently we’re going to be asking more questions and explore ways we can prevent this from happening in the future,” Gray explained.
The name of the company involved in this transaction has not been released, not even to members of the city council.