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County Tax Collector considers making more changes to 'bed taxes'
Mar 18, 2010 (The Porterville Recorder - McClatchy-Tribune Information Services via COMTEX) --
The Tulare County Board of Supervisors has delayed a vote that would clear up ambiguities in its ordinance on hotel-stay related taxes.
An item to consider the proposed changes to the ordinance was pulled from Tuesday's agenda, giving county tax officials more time to consider how litigation occurring in other counties over Internet travel companies and the amount of bed taxes they pay to local governments might affect Tulare County.
According to Treasurer/Tax Collector Rita A. Woodard, additional changes concerning the amount of taxes paid by companies such as Expedia and Orbitz could be included in a new draft ordinance presented to the Board of Supervisors in as soon as two weeks.
"The whole purpose of rewriting this ordinance was to clarify our wording," Hiley Wallis, chief deputy treasurer/tax collector said. "I was trying to get more information on the litigation to make sure there wouldn't be anything else we needed to update."
All cities and counties have the authority to levy the tax -- called a Transient Occupancy Tax (TOT) -- which is collected by owners or agents of inns, mobile homes and other hotel-type businesses from occupants, and then paid back to the city or county.
Wallis learned about ongoing lawsuits that could potentially require further revisions to the Tulare County TOT ordinance during a meeting with the California Association of County Treasures and Tax Collectors.
The Internet companies purchase rooms at discounted rates, mark up the prices, and sell them to consumers. The internet companies reportedly pay taxes based on wholesale rates charged by the booking companies, rather than the full rate charged to occupants.
"We want the ordinance adopted as soon as possible, and these court hearings could go on for months," Woodard said, noting that the Tax Collector's Office will not wait for a judge to make a decision.
"We think all taxes should be equal, it shouldn't matter if you rent a hotel room online or over the phone. They should all pay the same tax," she said.
In January, the 2009-10 Tulare County Grand Jury reported that the county's current ordinance, had resulted in a loss of $9,000 in tax revenues. It addressed three aspects of the TOT ordinance that it said were not clearly defined: which types of rental accommodations are subject to being taxed under the ordinance, what constitutes a day's stay and a partial day rental.
County leaders had already directed staff to clean up the ordinance before the Grand Jury began looking into the issue.
On Oct. 27, supervisors voted to remit $6,928.05 in taxes that the Tax Collectors office said were owed by a Three Rivers couple who rented the second floor of a home along the main fork of the Kaweah River.
Geoffrey and Diana Glass argued that they did not owe the money, because they did not intend to rent the vacation spot on a regular basis, and that the space was used by friends and real estate clients.
The space was rented for about 35 days in 2006, increasing to more than 100 days in 2009.
In order to not be charged these taxes, the facilities must be operated by a "person who is not regularly engaged in the business of renting such facilities and does so only occasionally and incidentally to his or her own use."
The tax collector and Third District Supervisor Phillip Cox, disagreed with the Glasses for how they constituted renting their unit for one-third of the year as "occasionally." But because the ordinance did not define "occasionally," the supervisors remitted the TOT the Glasses owed.
Following their decision, they asked the Tax Collector to clean up the ordinance by adding more details "so there's no guess work," Chairman Steve Worthley said.
The changes to the ordinance, if adopted, would define "occasionally and incidentally" as a period fewer than a total of 15 days a year. Additionally, the proposed changes state clearly where hotel and cabin operators can obtain registration and reporting forms, at the Office of the Tax Collector or on the county Web site.
"This has been delayed so many times, we are anxious to get this completed," Worthley said of the potential updates to Tulare County's ordinance.
Contact Jenna Chandler at 784-5000, Ext. 1050, or jchandler@portervillerecorder.com.
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