Richmond restaurant hit with $37k bill after a mistake it says the city made

RICHMOND, Va. (WWBT) - A vegan family-owned restaurant in Manchester faces nearly $40,000 in charges from Richmond after not making its meals tax payments for about nine months.

Philly Vegan co-owner Samuel Veney says they charged customers that tax the first week it was open but then stopped once.

He says a city staff member told him it did not apply to the business since it is takeout only.

A meal tax is an additional 7.5% charged on a meal that goes straight to the city.

Veney says he was not charging customers that amount, so now they do not have it readily available to hand to the city. He says they owed around $26,988.82 at first, but over time, it has grown to $37,277.33.

“These are parents that are taking care of their children, raising their family,” Veney said. “This is a family business. Why don’t you care about the families in the city of Richmond? Why don’t you care about the community in the city of Richmond? Why doesn’t the city of Richmond actually care about the city of Richmond?”

Veney opened his restaurant in 2021 when he went to the city for a business license.

He says a city staff member filled out his form and told him he did not need to open a meals tax account because it did not apply to takeout-only restaurants. Veney says he just trusted the city’s word at the time.

Veney tells 12 On Your Side he did not realize it owed the payments until nine months later, in 2022.

When the restaurant participated in an event, an auditor told them they needed to charge a meal tax.

He says he explained the situation to the auditor and started charging customers the tax. Since then, he says he has made every payment to the city on time.

He showed documents to 12 On Your Side, showing the city-owned up to making an error.

“I should be able to walk into the Department of Finance by myself, not with a lawyer, to make sure that employees are doing the correct thing by myself and be able to open up my business properly and get everything taken care of without worrying about the city messing it up and then me being penalized,” Veney said.

Richmond’s mayor and city staff were not available for interviews, but a city spokesperson sent a statement about the situation.

“The finance department does not offer business or tax advice. Each business operating within the city, is responsible for knowing their obligations and for addressing liabilities. Information regarding applicable taxes is on contained on the city website and is provided to the business when the business license is issued. The city does not produce or mail bills for meals tax. This tax is collected just like how sales tax is collected by the state.”

The meals tax is an honor code for the most part, as restaurants self-report the amount collected.

Veney says the city offered to waive late fees, but he still owes the money that would have come from taxes, even though he was not charging customers that amount.

He says that is money he could be using to expand his business, and it does not make sense to pay it out of pocket now.

The city says, “The City of Richmond has legal obligations to uphold regarding tax collection; meals tax is no exception. A meals tax is a self-reported tax, as such the taxpayer remits the payment accordingly.”

There is an appeal process, which Veney said he has tried to do, but he says the finance director has not continued communicating with him.

“We intended to do everything the right way because we’ve been trying to do right business,” Veney said.

Veney is now faced with the price tag of communication worth almost $40,000.

His restaurant is in an area where city councilor Andreas Addison believes the city could work on being more proactive. Addison is a business owner, and he says over the years, he has heard from more and more residents facing payment issues.

“I think we put too much of an emphasis on the business owner to know what to take care of on their own,” Addison said.

It will not be an immediate fix. Addison says it could take a more updated system to notify businesses of their payments.

“In general, I think we have utility issues dealing with the same problem where there are residents getting utility bills that are significantly higher, and there’s no notification about why or what the next steps are,” Addison said. “And so if that’s happening in one capacity, I think we’re seeing an issue where customer service, customer engagement, and really meeting the demands and expectations in a 21st-century model is key.”

Until then, Philly Vegan has also worked with other businesses impacted by meal tax payments and fees. Veney says it will take a multi-step resolution to improve things, including ridding of the costs the city says Philly Vegan owes.

He also wants better communication from the Finance Director to ensure other businesses do not have to go through what he has. He says he wants the city to show it cares for the community.

“Do the right thing. We don’t understand why you would want to harm us.,” Veney said.

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