CHARLES TOWN — The Jefferson County Sheriff’s Office has begun an inquiry with the county prosecutor to see what is behind a steep decline in hotel/motel tax revenue.
Annette Gavin, the chief executive officer of the Jefferson County Conventions and Tourism Board, said that while fluctuations in year-to-year or month-to-month tax revenue are normal, she and the board have noticed a decline in collections over the past year, even in months when revenue is historically higher.
Gavin, who appeared before the County Commission last week to discuss the issue, said the drastic drop in revenue this past April, is what caused her to see a red flag.
“To see a 10-20 percent drop (in tax revenue) is one thing – but when you see a glaring amount of 46 percent something’s wrong. That’s impossible,” Gavin said.
Commissioners say there is sufficient reason to believe that some hotel and motel owners in Jefferson County are either not collecting enough visitor’s tax—or not submitting the tax they’ve collected.
Sheriff Peter Dougherty said he is meeting with the prosecuting attorney’s office to review the tax collecting procedures.
“As sheriff and treasurer I have two dual responsibilities in that area when someone thinks their tax is not being paid,” Dougherty said.
The visitor’s tax is a 3 percent tax that hotel and motel owners collect from each guest. The tax is also called a “trust tax” because the government does not mail out a tax bill to businesses, instead it relies on the business owner collecting the fee and turning it over to the city or county.
“In this case, you don’t get a tax bill from us,” Dougherty said. “You pay it and send a notice of what you received. Therefore you pay a percentage of your receipt. As it is in all business owners, most of the businesses pay by receipts and so on.”
After the visitor’s tax is collected, half of it goes to the CTB, which then uses it to promote the county to increase tourism. The other half of the money is divided up between Jefferson County Parks and Recreation, Jefferson Art Council, and the Jefferson County Historic Landmarks Commission.
Dougherty said he will be in contact with each hotel and motel as part of the investgation.
“Business owners will get a letter from me, the sheriff, requesting that they submit their records, their information about their hotel or motel occupancy,” he said. “We will be telling them that they have to provide that information and then we’ll go from there.”
Dougherty said if discrepancies are found, charges may be brought against the businesses that have not been collecting or reporting their taxes accurately.
“If the revenue, upon review, if it is not sufficient to pay the same amounts as last year that is one thing; but if you deliberately withhold you can be subject to civil and criminal prosecution, similar to how the IRS works,” he said.
Commissioner Patsy Noland, who serves on the CTB, said she looks forward to getting to the bottom of the reasons for the shortfall.
“The CTB depends on that revenue for their marketing and other agencies are as well – parks and recreation and so on,” she said. “It would be good to be sure that things are going as they should and that things are being remitted as directed pursuant to law.”
While April’s numbers and other declines in revenue this year have caught the attention of the County Commission and the CBT, Gavin said overall the relationship between her organization and the majority of hotel and motel owners is sound.
“These are my tourism partners – all the hoteliers,” she said. “We have a really good relationship. They are actually representatives of hotels that sit on our board.”
Gavin said she is not making any assumptions that someone has or has not paid.
“But we are just making sure when we see that flag we have to find out why. We need a solid number of what numbers we have so we can forecast for next year and set our budget accordingly.”
Commissioner Lyn Widmyer said if it turns out that some establishments are not collecting the tax they are only hurting themselves.
“It doesn’t just affect CTB, but others in the community too,” Widmyer said. “The CTB uses their half of the tax revenue to go back out and market our county. If we are not seeing the revenue, it hurts the entire county and ironically the hotels too, who are trying to see an increase in tourism.”