New London — The city tax assessor’s office plans to outsource the labor-intensive job of personal property audits of city businesses.

The move is expected to provide a boost in tax revenues for the city and an education for businesses who have either not declared personal property or inaccurately have reported. There were a total of 515 nonfilers or late filers last year, all of whom were assessed a 25 percent penalty for failure to file before the Nov. 1 deadline.

The City Council recently approved the use of Tax Management Associates Inc., at no upfront cost, to audit 270 business accounts.

The company is expected to look back over a three-year period, as allowed by state law, at businesses with personal property declarations that range in size from $50,000 to $400,000 with a mix of smaller and larger accounts thrown into the mix.

Tax Management Associates, in a written presentation to the city, projects it could find as much as $1.8 million in new taxes over a three-year period, a figure that includes the 25 percent penalty applied to accounts with inaccurate declarations. That equates to $11 million per year over three years in assessed property values that were either underreported or not reported.

As part of the contract, TMA would take a 30 percent cut of the newly discovered revenues, or an estimated $278,700.

The city assessed personal property and collected taxes on a total of $119 million in personal property in 2017. Tax Assessor Paige Walton said there was a total of 1,421 personal property accounts that included local businesses, out-of-town leasing companies with equipment in New London and any unregistered vehicles.

There were a total of 515 nonfilers or late filers last year, all of whom were assessed a 25 percent penalty for failure to file before the Nov. 1 deadline. When a business either does not file or underreports property, an assessor must determine a valuation based on “best information available,” Walton said.

State law allows the assessor or designee to perform audits.

The use of TMA comes at the request of Walton and Finance Director Don Gray, who acknowledged the staffing constraints that limit the city’s ability to conduct audits and verify correctness of declarations.

“Unfortunately, because we have such a small staff here in New London we do not have the manpower to perform regular in-depth audits in-house that span three years’ prior for each account,” Walton said in an email.

Walton said TMA will notify each of the businesses that are selected for audit and they will be conducting on-site inspections of the business property, as well as traveling to the taxpayer’s headquarters or place of records as needed.

TMA has provided services to local municipalities that include Montville and Norwich. Norwich Comptroller Josh Pothier said the city still uses the company.

“The city did get a boost in revenues. I think they are very effective at what they do,” Pothier said.

Pothier said he doesn’t think businesses necessarily are trying to deceive the assessor’s office but audits often will turn up unreported equipment that might have been overlooked.

Norwich entered into a contract with TMA in 2013 and by June 30, 2015, the city reported $92,624 in additional taxes, interest and penalties before TMA secured its fee. Later that same year, TMA completed a three-year audit of the city’s largest taxpayer, Computer Sciences Corporation, and found $1.1 million in additional taxes.

Electric Boat, with a net assessed value of $57.5 million, is New London’s largest taxpayer.

Gray said there is likely to be additional revenue for the city but “hopefully a teaching experience for some of these small businesses on how to fill out these declaration forms and what they don’t have to declare.”

Gray said there is also the possibility a business has filed something the wrong way that results in a benefit to the business: “It is a two-way street.”

g.smith@theday.com