hotel motel tax presented by: georgia department of community affairs office of research and surveys...
TRANSCRIPT
Hotel Motel Tax
Presented By:Georgia Department of
Community Affairs
Office of Research
and Surveys 1
Hotel Motel Tax
Article 3
Title 48, Chapter 13
O.C.G.A. 48-13-50 … 48-13-56
Excise Tax on Rooms Lodging
and Accommodations
Enacted in 1978
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Hotel Motel TaxO.C.G.A. 48-13-51(a) and
O.C.G.A. 48-13-51(b) Currently there are 24 different tax authorizations
included in O.C.G.A.48-13-51(a) H.B. 1168 (discussed later in this presentation) added a
general authorization under O.C.G.A. 48-13-51(b) Allowable tax rates vary from 3% or less to 8%* Each authorization has a unique set of expenditure
requirements for a restricted portion of revenue
* paragraph (a)(1) provides for a tax rate of 3% or less paragraph (b) provides for a tax rate between 6% - 8% all other authorization paragraphs provide for a set tax rate
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Hotel Motel TaxQ. Must a Bed and Breakfast Collect the Tax?
What about other short-term rentals of condos, apartments ?
Local governments have some flexibility on how to apply this as long as their ordinances do not conflict with state law. (i.e. if the local government’s ordinance requires the operator of a bed and breakfast to obtain a business or an occupational tax license then the operator would be required to collect the tax.)
General provision of Title 48, Chapter 13 (48-13-6) states that the ”. . . governing authority of each county/municipal corporation is authorized to classify businesses and practitioners of professions and occupations and to assess different taxes on different classes of businesses and practitioners.”
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Hotel Motel Tax48-13-51(a) (1) (A) Local governments may levy and
collect an excise tax upon the furnishing for value to the public of any room or rooms, lodgings, or accommodations furnished by any person or legal entity licensed by, or required to pay business or occupation taxes to, the municipality for operating a hotel, motel, inn, lodge, tourist camp, tourist cabin, campground, or any other place in which rooms, lodgings, or accommodations are regularly furnished for value.
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Hotel Motel TaxRequirement to Collect the Tax
O.C.G.A. 48-13-51(h)(4)
Does not apply to charges imposed for any continuous occupancy after the first thirty days of
continuous occupancy
O.C.G.A. 48-13-51(h)(1)
Does not apply to persons who certify that they are staying in such room, lodging, or accommodation as a result of the destruction of their home or residence by fire or other casualty
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Hotel Motel Tax
Requirement to Collect the Tax
O.C.G.A. 48-13-51(h)(3)
Does not apply to Georgia state or local government officials or employees when traveling on official business
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Hotel Motel TaxInn Keepers’ Records and Books
O.C.G.A. 48-13-53.4
Each innkeeper is required to file a return and pay taxes to the local taxing jurisdiction under this article and must keep:
Suitable records of the charges taxable under this article; and
Other books of account which are necessary to determine the amount of tax due.
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Hotel Motel TaxAuditing of Innkeepers’ Records
O.C.G.A. 48-13-53.4
All books, invoices, and other records must be open to examination at all reasonable hours by the local taxing jurisdiction.
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Hotel Motel Tax
Generally the restricted portion of tax revenue must be used for:
Promoting, attracting, stimulating, anddeveloping conventions and tourism
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Hotel Motel TaxBasic 3% Tax
O.C.G.A. 48-13-51(a)(1) thru (a)(2)
How much is restricted ? It Depends Year 1-none of the tax is restricted. The proceeds can be used for any legal general fund purpose
Year 2-The percentage of hotel tax expended to promote tourism (if any) in year 1 is now restricted for the purpose of promoting tourism and will be the percentage of restricted tax until a larger percentage is expended. In other words, the largest percentage of tax expended to promote tourism becomes the new restricted percentage.
Paragraph (a) (1) and (a)(2) are the only paragraphs with this sliding scale restriction.
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Hotel Motel Tax The expenditure requirements for the other
authorizations vary greatly
The first 3% of tax collected under all authorizations except paragraph (a) (1) may be expended for any legal general fund purpose
5% tax -- 40% of revenue restricted 6% tax -- 50% of revenue restricted 7% tax -- 57.145% of revenue restricted 8% tax -- 62.5% of revenue restricted
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Hotel Motel Tax
“Promotion of tourism, conventions and trade shows”
What does this mean?
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Hotel Motel TaxO.C.G.A.48-13-50.2(4)
“Promoting tourism, conventions, and trade shows” is defined as:
Planning, conducting, or participating in programs of information and publicity designed to attract or advertise tourism, conventions, or trade shows
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Hotel Motel Tax
Most authorizations require all or part of the restricted funds to be expended through a contract or contracts with the state, a department of state government, a state authority, or a private sector nonprofit organization
Or as provided in 5% authorization provided by 48-13-51(a)(3) a Convention Visitors Bureau Authority created by a local Act of the General Assembly
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O.C.G.A. 48-13-50.2(3)
A Private sector nonprofit defined: A chamber of commerce, convention and visitors bureau, regional
travel association, or any other private group organized for similar purposes which is exempt from federal income tax under Section 501(c)(6) of the Internal Revenue Code of 1986
Exception to the Rule
A county or municipality which has prior to April 1, 1990, contracted for a required expenditure under this Code section with a private group which is exempt from federal income tax under provisions of Section 501(c) of the Internal Revenue Code other than Section 501(c)(6) may continue to contract for required expenditures with such a private group
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Hotel Motel TaxHotel Motel Tax
Hotel Motel TaxState Authority - Defined
O.C.G.A. 48-13-50.2(5)
An authority created by state law which serves a state-wide function including, but not limited to, the Georgia World Congress Center Authority
Does not include authorities created for support of a local government or a local purpose or function
Does not include authorities such as regional commissions and any organizational entities they may create, or local water and sewer authorities, etc.
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Hotel Motel TaxBudgeting
O.C.G.A. 48-13-51(a)(9)(A)
Local governments must adopt budget plan specifying how restricted funds will be expended
Contractor (CVBs, Chambers, etc.) budgets must be incorporated into local government’s tax budget plan
When contracting with other entities, must require them to provide expenditure budget
Cost Allocation Plan might be necessary (see Handout 1)
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Hotel Motel TaxDCA Reporting
O.C.G.A. 48-13-56
Each city and county as a condition of continuing authorization to impose the tax, must file annual Hotel Tax Report with DCA within 180 days of the end of their fiscal year
Form numbers correspond to the specific authorizing paragraphs
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Hotel Motel TaxDCA Reporting - Continued
O.C.G.A. 48-13-56
Report must specify the rate of taxation and amounts collected and expended pursuant to this article
To assist with both the budgeting and reporting requirements, the Uniform Chart of Accounts (UCOA) provides a Special Revenue Fund to account for H/M tax expenditures (Fund #275)
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Hotel Motel TaxDCA Reporting - Continued
DCA Hotel/Motel Tax Report must include a Project/Contractor Information Schedule
(see Handout 2)
Must identify both the projects and the contracting entity.
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Hotel Motel TaxDCA Reporting - Continued
DCA Administrative Rule
Must file with DCA a copy of most current hotel/motel tax ordinance
Ordinance should cite authorizing paragraph
Ordinance should contain all provisions necessary for proper administration of tax (both on local level and state compliance) (see Handout 3)
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Hotel Motel TaxLocal Government
Audit Reporting Requirements
O.C.G.A. 48-13-51(a)(9)(B)(i)
A compliance determination must be made by the auditor each fiscal year and be prominently reflected in the audited financial statements
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Hotel Motel TaxAuditors’ Compliance determination
must disclose:The amount of tax receipts, and expenditures as a
percentage of tax receipts
If the audit identifies noncompliance with the expenditure requirements, noncompliance finding must be included in audited financial statements
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Hotel Motel TaxPerformance Review Board
DCA Office of Research and Surveys is required to investigate bona fide complaints and present preliminary reports to the Hotel Motel Tax Performance Review Board.
The Hotel Motel Tax Performance Review Board (eleven members) meets between September 1 and December 1 to review preliminary reports and to hear from interested parties.
The Review Board may make changes to the preliminary reports. The final reports (as approved by the Board) are submitted to the Commissioner of DCA.
Upon the DCA Commissioner’s approval the final reports (that include required corrective actions) are provided to the local government.
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Hotel Motel TaxPerformance Review Board - continued
The local government is responsible for working with CVBs, Chambers, or other contractors as might be necessary to ensure appropriate implementation of required corrective measures.
The local government is required to provide a specific implementation plan for the required corrective actions to the DCA Commissioner within 90 days of receiving the final report.*
*Ideally, this plan would be adopted by the local government at an official meeting
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Hotel Motel Tax
House Bill 1168
Created new authorizing code section 48-13-51(b) and some global changes to H/M Tax law
Provides for tax rates up to 8%
Governments are not required to switch from their current authorizing paragraph to this new authorizing code section
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Hotel Motel TaxHouse Bill 1168 - continued
Prior to July 1, 2008 (the effective date of H.B. 1168)
local governments electing to collect Hotel Motel Tax for the first time
And
Local governments opting to change paragraphs had 24 different authorization paragraph options from which to choose.
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Hotel Motel TaxHouse Bill 1168 - continued
H.B. 1168 reduced the options from twenty-four (24) to three (3) authorization paragraphs:
> 48-13-51-(a)(2) which is the basic 3% option* > 48-13-51 (a) (3) which is the basic 5% option* > 48-13-51 (b) which was newly created and provides for a tax
rates of 6% to 8%
*Local Governments can resolve to collect Hotel Motel tax under (a)(2) and (a)(3) without involvement from the General Assembly
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Hotel Motel TaxHouse Bill 1168 - continued
A tax levy authorization pursuant to 48-13-51 (b) requires a local Act of the General Assembly
Which requires the following:1)The local government must first adopt a resolution which specifies the tax rate (6% or 7% or 8%), and identifies the projects or tourism product development purposes, and how proceeds will be allocated.
2)After the local government adopts their resolution, a local Act by the General Assembly must be passed.
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Hotel Motel TaxHouse Bill 1168-continued
Expenditure Requirements of 48-13-51 (b): The tax collected up to the amount that would have been collected
at a 5% rate is controlled by the provisions of O.C.G.A. 48-13-51 (a)(3).
Up to 100% BUT at least 50% of the tax collected above the rate of 5% must be expended for promoting tourism, conventions, and trade shows by the destination marketing organization (definition to follow) designated by the local government.
The remainder of the tax collected above the rate of 5% that is not expended to promote tourism must be expended on Tourism Product Development (definition to follow)
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Hotel Motel TaxHouse Bill 1168 - continued
Destination Marketing Organization means:O.C.G.A. 48-13-50.2(1)
A private sector nonprofit organization or other private entity which is exempt from federal income tax under section 501(c)(6) of the Internal Revenue Code of 1986 that is supported by the tax under this article, government budget allocations, private membership, or any combination thereof and the primary responsibilities of which are to encourage travelers to visit their destinations, encourage meetings and expositions in the area, and provide visitor assistance and support as needed
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Hotel Motel TaxHouse Bill 1168 - continued
Exceptions to Expenditure RequirementsO.C.G.A. 48-13-51(e)(2)
Governments may continue to expend the proceeds of the tax through a contract or contracts with the same entity or entities other than a destination marketing organization if, prior to each fiscal year in which the tax is imposed, the county or municipality adopts a budget plan specifying how the proceeds of such tax are to be expended.
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Hotel Motel TaxHouse Bill 1168 - continued
Tourism Product Development means:O.C.G.A. 48-13-50.2(6)
The creation or expansion of physical attractions which are available and open to the public and which improve destination appeal to visitors, support visitors´ experience, and are used by visitors. Such expenditures may include capital costs and operating expenses
(see Handout 4)
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Hotel Motel TaxSuggestions/Tips
Planning for Future
Anticipate Revenue Based on Past Trends and New Hotels
Provide a Regular Process for Reviewing the Revenue Source
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Hotel Motel Tax
GMA’s Revenue Recovery Service Review existing ordinances to ensure it is up to date with
current law. Provide suggested improvements for city attorney review.
Two Phase Process Analysis and Compliance – review past 36 months of returns
to determine if any hotels are not paying correctly Field Audits – only hotels that are suspected for
noncompliance are subject to an on-site review. Written report including letters to notify hotels of any
underpayments, assistance with any appeals or questions by hotel staff. Information on each hotel (# of rooms, etc.), 36 month payment history and graphic representation of revenue per hotel
Information can be used by city for their own on-going compliance
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Hotel Motel Tax
GMA’s Revenue Recovery Service
Contact Information:Lou Comer, Director, Local Gvt.
ServicesPhone: 678-686-6260E-mail: [email protected]
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Hotel Motel TaxDCA’s Website Address
http://www.dca.ga.gov
Or go directly to the Office of Research’s main page for more information about hotel/motel tax
http://www.dca.ga.gov/development/research/index.asp
Under “Programs” click on “Local Government Surveys” and then “Hotel/Motel Tax”
Or go to the following link to access the formshttp://www.dca.ga.gov/development/research/programs/hotelmoteltax.asp
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Hotel Motel TaxNeed Help?
DCA
James Stephens Jonathan Sharpe Government Research Analyst Manager, Office of Research (404) 679-0591 (404) 679-4996 [email protected] [email protected]
GMA
Mark Baggett Lou Comer Governmental Relations Associate Director, Local Gvt. Services (678) 686-6287 (678) 686-6260 [email protected] [email protected]
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