Crossville Chronicle, Crossville, TN

Area News

April 17, 2014

Panel discusses auditing hotel/motel tax collections

CROSSVILLE — Commissioners on the budget committee discussed the possibility of auditing hotels and motels in the county regarding the collection of hotel/motel tax collection figures being down.

Cumberland County Finance Director Nathan Brock said the collection process in the county dates back to a 1979 private act passed by the county.

Last year there was an amendment to the act approved in legislature for increasing the rate.

Brock reported hotel motel tax collections remained below budgeted projections for fiscal year 2013-'14. Brock said actual collections for the  fiscal year are at $465,102 of a budgeted amount of $738,000, or 63 percent. This figure is more than $20,000 less than last year's collection figures.

Brock said that audits are under section five of the private act and it states the county trustee will audit a random sampling of hotels and motels once per year and report the findings to the county.

"It has not been done that I'm aware of. Section eight of the act requires each hotel and motel to retain tax collection records for a minimum of three years for audit purposes. I called some of the other counties around here and talked with them and talked with Sevier County. They said it was handled through the trustee's office there, as well," Brock said.

He said Sevier County does about 20 audits per year and it is contracted out to a third party.

He said the Putnam County trustee said it was not done on site at the businesses recently, but they had internal audit reviews in their office and track the payments made by each hotel to see if can they can pick up any trend for errors.

Brock said that Roane County Mayor Ron Woody said the county clerk handles it there.

"He said they audit every two or three years and they are randomly selected and it's been successful. The counties that audited had the least amount of variance in tax collections," Brock said. "Of course we believe that all of our hotels and motels are good corporate citizens. I'm not saying they aren't."

Allen Foster, 4th District commissioner, said, "Has anybody done a comparison here?"

Brock said, "The finance department has not. We do record the collections."

John Kinunen, 9th District commissioner, asked, "Do they (hotel/motel owners) have the law? Do they know it?"

Brock said, "I assume they have law included with a package they get with obtaining a new business license."

Dave Hassler, 3rd District commissioner, said, "Maybe we should have the trustee do random audits."

Sonya Rimmer, 8th District commissioner, said, "I think we ought to invite the trustee to a meeting and ask what she is doing and what she feels she can do."

Harry Sabine, 1st District commissioner and budget committee chairman, said he would ask the county trustee to attend the next meeting.

A few months ago, some commissioners on the budget committee began questioning why the hotel/motel tax collections were down so much over past years.

The committee also agreed on consensus they would like to check into what else could be done about auditing in the future.

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