Monday, January 18, 2010

Grand jury calls for broader hotel tax in Tulare County

A hotel occupancy tax that's led to confusion for some bed-and-breakfast owners — and, in at least two instances, forfeited tax revenue for Tulare County — should be made more clear and more broad, according to a report issued last week by the Tulare County grand jury.

The tax should cover nearly any short-term rental within the county's jurisdiction, the report said. The recommendation, if followed by the county, would require private homes and vacation cabins rented occasionally for short terms to fall under the tax, which adds 10 percent to hotel bills throughout the unincorporated areas of the county.

The transient occupancy tax, or TOT, has brought between $900,000 and $1.2 million to the county annually during the last five years.

Currently, only 59 rental properties are subject to the tax, which was adopted in 1964 and has been amended several times, most recently in 2008. The properties include hotels, inns, tourist homes, motels, lodging houses, dormitories, mobile homes and public or private clubs that are rented out for 30 consecutive days or less to the same user.

Not subject to the tax, according to the current ordinance, are private homes, vacation cabins or similar facilities rented by those "not regularly engaged in the business of renting" and who rent only "occasionally and incidentally" to their own use of a structure.

In its report, the grand jury called such wording "ambiguous," saying that it failed to define clearly what types of rental accommodations are subject to the tax and what constituted a rental period.

That gray area, according to the panel, resulted last year in the successful appeal, before the Board of Supervisors, of the tax bills of two vacation-lodging operators.

The appeals forced the county to forfeit $12,000, according to the Tax Collector's Office.

On top of that, the grand jury said the county has been unable to collect transient taxes for years on "numerous short-term rentals" because of the ordinance's vague wording and miscommunication between rental owners and the county tax collector.

#A revised ordinance that would impose the tax on "any rental that is rented less than 30 consecutive days to the same renter."

#Clarification of what constitutes a full day of rental and what constitutes partial-day use.

#Registration and inspection of all properties subject to the transient tax. (According to the county, the current budget does not allow for general site inspections by staff. In August, the county hired an investigator to locate rental owners who were not complying with the ordinance, a move that resulted in the recovery of more than $34,000 in fees and penalties, according to the Tax Collector's Office.)

Revision expected before April

It was not clear last week how many additional rental accommodations in Tulare County would be subject to the tax if the grand jury's recommendations were followed.

The Tax Collector's Office, collaborating with the county counsel, is already working on a revision of the ordinance, which it plans to present to the Board of Supervisors within the next three months, according to Rita Woodard, the Tulare County tax collector.

In an e-mail Thursday, Woodard did not say how the revision would incorporate the grand jury's recommendations, if at all.

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