Some Peoria businesses will pay more taxes starting Jan. 1. Here's why

Published: Wednesday, December 27, 2023 - 4:05pm

January 1, 2024 will begin a new tax bill for certain businesses in Peoria after a random audit conducted about six months ago revealed an issue.

The auditor discovered a dance studio was not paying a transaction privilege tax commonly called sales tax for its classes. Then, Peoria found more dance, gymnastics and martial arts studios that had not paid similar taxes for instruction, while others did. 

Deputy City Manager Kevin Burke told the city council, “Those people who have been paying the tax, and it’s a small group, but some start paying it as soon as this summer, we will have to look at refunding those as part of this solution and that's fine we think that’s about a $5,000 or less cost to the city. But again, most of that was new money that was not coming in anyway.”

The city council approved the plan and, starting Jan. 1, Peoria will collect sales taxes on dance, gymnastics, and martial arts studios that charge for dance, sports, athletic, or health-related instruction. 

Rhonda Carlson, president of Peoria Chamber of Commerce said the action would prevent several small businesses from closing, “Which is a huge win for us the chamber and just as a city, we look forward to working with the city on better informing businesses moving forward. We do still have plans to work with our state legislators because we do feel that instructional based businesses really does not apply to this amusement tax. So we look forward to hopefully making some positive changes at the state level.”

Peoria said it currently has 18 businesses providing instruction that fall under the amusement tax classification.

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