Police chief pushes hotels for overdue lodging tax
At least one lodging business in the Town of Bath has already made payments on overdue hotel/motel taxes and others have contacted the town clerk following a visit from Police Chief Craig Pearrell last week. One payment was for taxes as far back as the 2008-2009 fiscal year, said town clerk Margie Allgyer. Pearrell gave inn owners until the end of the month to catch up on payments or make payment arrangements.
Pearrell went to inns and hotels on Monday, October 18, “with the law in hand,” he said. He focused on four establishments that are significantly behind. There are a dozen lodging businesses subject to the town’s lodging tax.
State law dictates how the 3% hotel/motel tax is collected and distributed, and lays out penalties if inns or hotels don’t remit the tax to the town or county where they do business.
Recently, Town of Bath officials have focused on the tax, because collections fell short by more than 50% last fiscal year. Half of the tax, which is paid by guests at local hotels, goes to Travel Berkeley Springs to fund tourism promotion. The other half is divided among community groups doing cultural or recreational projects in town.
Both groups have struggled with the lower-than-expected lodging tax revenue this year.
Tourism and lodging officials agree that hotel business has been down this year, maybe by as much as 20%. That revenue decline is compounded by the fact that some businesses haven’t paid their hotel tax in more than 12 months, even though they continue to collect it from guests.
Because the businesses haven’t filed their hotel tax reports, town officials aren’t even sure how much money they are owed in back taxes.
Pearrell said lodging owners responded immediately to his reminders. He gave them until the end of October to file reports stating how much tax they have collected, and to turn that money over to the town. Businesses that are many months behind can make arrangements to catch up with their payments, the police chief said.
“We’re not talking about $2 per week,” Councilman Jim Slough said at the October 19 town meeting. “They should file all reports within two weeks, so we know what’s owed, then work out a restitution plan.”
“We’re going by the state law,” Pearrell said.
There are criminal penalties for not reporting the tax income or failing to turn over the tax to town officials. The first offense is a misdemeanor and can carry a $500 fine. If convicted of a second offense of withholding the tax, a business owner could face felony charges, a $1,000 fine and jail time.
“I’m not making that determination. A law judge will,” said Pearrell.