Town due nearly $30,000 in unpaid hotel tax funds
Despite lots of talk about the issue, Town of Bath officials have yet to collect most of the hotel/motel tax dollars owed to them by several lodging businesses in town.
As a result of the shortfall in tax collection, Travel Berkeley Springs — the local tourism group that is supposed to receive half of the tax — voted Monday to limit its visitor center operations to Friday, Saturday and Monday.
The group is already more than a month behind in paying their lone employee, said TBS board president Stephanie Rebant.
TBS has also cut back on its advertising efforts that promote tourism here.
“We’re operating at a loss due to the decline of the hotel tax,” said Rebant.
Tax paid by guests
The hotel tax is a 3% fee added to the lodging bills paid by guests at hotels, inns and motels in both the town and county.
Businesses are supposed to collect the tax and turn it over to town or county officials, along with a report saying how much tax has been paid.
Inside the Town of Bath limits, there are 12 businesses that collect the tax. Under the town ordinance, the tax dollars collected are to be paid to the town monthly.
Nearly $30K overdue
As of the first week in January, the town was due more than $30,000 in overdue hotel taxes.
Most of the money is due from The Country Inn, the town’s largest lodging establishment.
Based on figures reported by The Country Inn, the hotel owes $24,731 in hotel taxes, dating back to July, 2009.
This total does not include figures from the inn for October, November and December of 2010.
Other late payers during the last months of 2010 include Rustic Retreats on Green Street, Maria’s Garden & Inn and Highlawn Inn.
According to town records, several businesses consistently pay the hotel tax on time, including the Berkeley Springs Motel, the Manor Inn, Berkeley Springs Cottage Rentals Tari’s Bed & Breakfast and, usually, Highlawn Inn.
Lodging establishments in the unincorporated county send their hotel tax proceeds to the Sheriff’s Tax office, which collects for the county.
County tax deputy Laura Breeden said her office has seen a sharp decline in delinquencies since 2009, when they started sending out regular reminders to lodging businesses.
When hotels are overdue in paying the tax, the Morgan County Commissioners also send a notice letter, Breeden said.
Of more than 30 lodging businesses in the county, only four are more than two months behind in paying, said Breeden.
Whose job is it?
Mayor Susan Webster did not respond to questions about who in the town government is responsible for collecting the hotel tax.
Town Clerk Margie Allgyer handles the tax paperwork and book keeping, but the town hotel tax ordinance doesn’t specifically designate who should collect the money.
Town council members have asked Chief Craig Pearrell to handle the tax delinquencies in the last few months.
Pearrell said now that the matter is in his hands, he wants to “get the situation under control.”
He acknowledged that the delinquencies had been left unanswered for too long, and said he hopes the council will put new procedures in place to keep on top of reports and tax collection.
Pearrell gave businesses a deadline of October 31 to report their tax liabilities and make a plan for paying overdue amounts.
Some businesses did turn in reports and update their business information, but the bulk of the overdue taxes are still unpaid.
Pearrell has asked County Prosecutor Debra McLaughlin about the possibility of criminal charges against businesses that have not passed on the tax dollars that they collected from guests.
Under the town ordinance and the state code, failure to pay the tax and make reports is a misdemeanor, and becomes a felony for multiple infractions.
McLaughlin said she could not comment on the tax issue while it is being investigated.
Community groups hit hard
Since the tax collection problem has come to the forefront of town business, town officials have said they intended to notify local community groups that hotel tax revenues won’t be coming in as expected.
Each year, the town council approves a list of recipients who will get a portion of the hotel funds and sets the amount they will receive.
For the fiscal year that started in July, town officials okayed $30,000 to groups like the Boys & Girls Club, Morgan County Parks & Recreation, the Morgan Arts Council, the Museum of the Berkeley Springs and others.
As of last week, the town had collected $7,400 of the tax — about 25% of what they had anticipated.
With six months remaining in the fiscal year, and three of those months in the winter season, the town may have trouble catching up to its estimates.
At the current rate, community groups could see only half of the tax revenue that they were promised.
The Bath council was expected to discuss the collection problem further at their meeting on Tuesday evening.