Wrangell officials are considering hiring an outside firm to audit delinquent sales tax returns, but first they plan to review the municipal code to ensure the borough can enforce collections.

“It wouldn’t make much sense to go through the time and difficulty of having the audit done and not be able to do anything about collecting what’s owed,” Acting Finance Director Rob Marshall said.

“Ideally, that municipal code review is something that I and (Borough Manager) Mason Villarma and the Borough Attorney Robert Luce can have completed by the end of November.”

Marshall said discussions have begun with Altman Rogers & Co. to conduct an external audit of business sales tax returns. During those talks, the firm recommended the borough review enforcement provisions in the tax code to align compliance expectations for business owners.

Marshall credited Daniel Harrison, who joined the City Hall finance department in February, with jump-starting collections. Harrison has sent more than 190 letters and worked with business owners to collect more than $90,000 in sales tax, Marshall said.

He added that many delinquencies likely stem from the nature of local small businesses. “This is a blue-collar area and so many of the business owners here also do the bookkeeping for their businesses,” Marshall said. “I’m sure that some of them probably lose track of time and forget the deadline; and there may be some that don’t quite understand how the system works.”

According to budget documents, the borough estimated almost $3.7 million in sales tax revenue in fiscal 2025, which ended June 30, up slightly from $3.625 million in fiscal 2024.

Businesses report sales taxes quarterly, with spring and summer quarters, ending June 30 and Sept. 30, providing almost 60% of total collections for the year.

Harrison said the pattern reflects Wrangell’s seasonal economy.

The borough’s tax receipts are forecast to hold stable for fiscal 2026, which started July 1. The budget assumes $3.7 million in collections.

The tax rate is 7% on goods and services.

Marshall emphasized the importance of tax collections to residents. “Twenty percent of the collected revenue goes to our schools,” he said. “And the rest of the revenue goes to fund other city projects like roads and other things.”