The Richmond Finance Department wrongly hit owners of 66,057 vehicles with late payment fees and interest in 2022 even though the owners paid by the deadline, a new audit has found.

Led by interim City Auditor W. Bret Lewis, the Dec. 5 audit of personal property tax operations during 2022 found the department led by Sheila White failed to account for a two-month extension in the due date that City Council approved.

City Council extended the deadline for payment from June 5 to Aug. 5, but the department failed to reprogram its computer system to reflect that change, resulting in faulty assessment of a 10% penalty and interest on the “late payments” that should have been recognized as having been paid on time.

The audit team turned up the problem in reviewing the department’s handling of personal property taxes, the second largest source of tax revenue for City Hall. The department billed $56 million in personal property taxes in 2022, the audit stated, based on a personal property tax rate of $3.70 per $100 of value.

Overall, the penalties were assessed against owners of 28% of the 235,000 vehicles registered in the

city, including about 220,000 vehicles owned by individuals and the remainder registered to businesses. The total value of the penalties and interest that was wrongly assessed was not disclosed in the audit, nor was the amount that the audit team recommended be refunded.

The department found after an internal review that 41,476 bills already had been changed, with 24,581 still needing correction.

Ms. White, in response to the finding, stated that a remediation plan has been completed to address the problem.

The audit found other significant flaws, though on a positive note, it also found that the large majority of bills issued in 2022 were accurate.

Still, the audit estimated that of the 220,805 individual accounts, between 3% and 11% might be inaccurate based on various exceptions to standard assessments.

The audit also found that when customers sought to question their bill or wanted to address billing problems, it took longer than city policy to get a response from the department.

The audit reported that the department, which is short-staffed, averaged 118 days to respond to queries, or about double the 60 days that city policy sets for a response. Some taxpayers waited nearly 200 days for a response, the audit noted.

The audit also found the Finance Department continued to bill taxes to some owners who were listed as living in Richmond but actually live in an adjacent county to which they pay their taxes.

One finding noted that the department is not collecting delinquent taxes, which have begun to sharply increase.

The audit team noted that between 2017 and 2022, the total amount of uncollected personal property taxes grew to $19.5 million, with the amount of delinquency growing rapidly since 2020. Delinquency set a record in 2022 when about $8 million remained uncollected, up from around $5 million in 2021.

The auditors found that 55,000 personal property taxes were delinquent as of October 2022, but also noted the department was using collection tools that might help increase payments.

However, Ms. White responded that collection methods are being used and that collections increased by $18.6 million for the 2022-23 fiscal year, boosting total collections by 7% over the budgeted revenue.

She also noted the department has improved its quality assurance for billing through the implementation of an automated system called RVAPay that has improved the accuracy of the bills that are sent.