Remit the Hotel Occupancy Tax in the Same Way as the Sales Tax

The state should require the hotel occupancy tax be remitted in the same way as the sales tax to produce a one-time gain for the state and make the tax system more consistent.


Background
Persons collecting the hotel occupancy tax are required to remit the tax to the Comptroller on the last day of January, April, July and October for taxes collected during the preceding quarterly period.

Those coll ecting and remitting the limited sales and use tax have several remittance options. For taxpayers owing less than $500 a month or $1,500 a quarter, the taxpayer qualifies as a quarterly filer. Quarterly taxpayers remit taxes owed to the state on the 20th d ay of the month following the end of each calendar quarter.

Taxpayers collecting more than $500 per month or $1,500 per quarter must report on a monthly basis. These taxpayers must remit taxes due on the 20th day of the month following the end of each calendar month.


Recommendation
Require taxpayers remitting the hotel occupancy tax to do so in the same manner as the sales tax. There would be no provision for prepayment of tax.


Implications
By requiring some hotel occupancy taxpayers to report on a monthly basis, the state can more effectively monitor delinquent payments and, therefore, improve collections.

Additionally, during the first year of implementation, this mode of reporting would produce a fiscal gain. Taxpayers converting to monthly status (assuming a September 1, 1993 effective date) would report normally in October for the July, August and September period. Beginning in November, these taxpayers would remit 11 monthly payments (November 1993 through August 1994) during fiscal 1994. Theref ore, the total number of months of hotel occupancy tax remitted during fiscal 1994 would be 13 a gain of one month of tax revenue.

While this method of tax collection might initially cause slight inconvenience among some taxpayers, it promotes more effic ient government by ensuring that state taxes owed by larger hotel occupancy taxpayers are remitted to the Comptroller in a more timely manner.


Fiscal Impact
There would be no significant administrative costs to the Comptroller s office.

Gain to the
Fiscal General Revenue Change in
Year Fund 001 FTEs

1994 $ 8,632,000 0
1995 0 0
1996 0 0
1997 0 0
1998 0 0