Past payment problems at Knight's Inn could lead to tourism tax audit
By: Darrell Todd Maurina
Posted: Tuesday, December 23, 2008 5:54 am
Some members of the Pulaski County Tourism Board want to audit Knights Inn to make sure all tourism taxes have been paid.
ST. ROBERT, Mo. (Dec. 23, 2008) — Some members of the Pulaski County Tourism Board continue to be frustrated with the former owners of the Knight’s Inn motel on the eastern end of St. Robert and would like to see that motel’s books audited.
The former owners of the Knights’ Inn failed to pay their transient guest taxes for more than a year and only paid their bill several months after selling the motel to a new owner. Tourism Director Beth Wiles reported at Friday’s Tourism Board meeting that for the first time in years, all of the county’s many hotels, motels and lodges are completely current on their guest taxes, but board member Bruce Farris, who is one of two hotel representatives on the board, questioned the accuracy of the taxes paid by the Knight’s Inn.
“We’ve accepted their terms that basically they’ve paid us what they owe us,” Farris said. “We’re taking their word on what their sales are; nobody has done an audit. Are there any future plans to set up audits in place?”
Probably not, Wiles said.
“We’ve discussed that over the years a few times; I don’t think it’s really within the board’s capacity to do the audits,” Wiles said.
Board Chairwoman Twyla Cordry agreed, noting that any effort to audit a local motel would require action by the Pulaski County Commission and might not make financial sense.
“An audit is going to be very expensive,” Cordry said.
Board member Richard Bailey agreed, but said there are better options.
“The way we set it up, we don’t have to do an audit; we can actually guesstimate,” Bailey said. “We have the right to bill them and then they have to prove to us that they don’t owe that amount.”
That’s what happened with the Knight’s Inn. Wiles said a preliminary bill was sent to the former owner based on renting all the rooms at a specified rate; the former owner said it was too high because not all rooms were rented every night.
“I said, ‘I know. You need to go back through your records and see what nights you rented the rooms at what price and figure it from there,’” Wiles said. “So he called me back with how many rooms he had.”
Farris said he still wasn’t satisfied with the documentation presented by the former Knight’s Inn owners.
“In a situation like this where we have somebody blatantly not paying, I think after a certain time level we should automatically administer some kind of auditing program because we don’t know what this person collected and frankly, I doubt very seriously if they paid the proper amount. It’s not really fair to the people who do pay,” Farris said. “Did he submit anything like his daily reports? In this particular situation where somebody hasn’t paid, I think he needs to have some supporting documentation. As (Tourism Board hotel representative Rick Morris) will tell you, these hotels kick out reports of what they do, and these are something he can just print out of his computer and submit.”
Wiles said she evaluated the past payment history of the Knight’s Inn and has monthly figures dating back to 2001 that don’t show a major discrepancy from what the former owners of the Knight’s Inn paid her.
However, Cordry agreed that there could be some benefit to requiring greater accountability from hotel and motel owners, perhaps based on the night audit sheets.
“We have talked in the past about doing spot audits — not really us doing them, but us just saying, ‘OK, you’ve paid your bill for this last month, prove to us that this figure was correct,’” Cordry said. “We don’t want to put them in a position of having to do that every month; that’s a lot of paperwork. But we should be doing spot audits.”
Board member Leon Saxton liked Farris’ idea of greater accountability as well, especially for hotels with a history of nonpayment.
“My mentality tells me that if we had something in place, if we’re going to get billed for the audit, then we should have something that we can give documentation to the hotel that they understand an audit will be implemented on your facility and you will incur the cost of the audit,” Saxton said.
Bailey said that may be difficult because any enforcement actions require county commission action, not just a vote by the tourism board.
“The problem is I think most of this has to go though the (county) commission,” Bailey said. “To change and go ahead and do an audit and things, would be basically the commission having the authority to do that. Now we as an agency probably could do this, the physical looking at the books, but it’s going to take the commission to say that we’re finding that what you’re paying is unacceptable.”
A spot audit shouldn’t be unduly burdensome to hotels that are doing their jobs properly, Bailey said.
“If we walked into one of your hotels, it would just be a half-hour scenario, probably, to find out what you did last month and what your tax would be based on? Would it take more time than that?” Bailey asked.
Morris said it wouldn’t be a major problem for Ernhardt Properties, the hotel chain in St. Robert for which he serves in management, but wasn’t sure the proposed solution was needed.
“If you’re collecting the tax and not paying, that’s not fair. And if you’re exempting the tax, and not charging, that unfair competition, too,” Morris said. “The only way to ever get the dishonest people honest is by checking; I just don’t know whether it’s really worth this … As a hotel operator, I don’t want to have to pay for a bunch of audits.”
Farris emphasized that he wanted to demand detailed documentation only from hotels with problem payment histories.
“I’m not saying that; I’m not even saying increase the documentation that under normal circumstances we give to tourism. I’m just saying when somebody falls blatantly behind, in order for us to grab their attention, we probably need to put a little more emphasis on what they are submitting,” Farris said. “Most programs in computer software now in the hotel business, you can print out a report of what you’ve done for the month and these are programs they can submit to us which would back up his figures so he’s not just writing down whatever the h___ he wants to write down.”
Board members came to no conclusions but did agree to study the matter further — and some joked that Farris’ hotels should be the first to receive a spot check that would be done on Thursday, the busiest night for most local hotels.
“It’s something we can maybe look at if they become delinquent, and then again, maybe once a month we ought to just do a random selection and say, ‘You’ve been selected just to make sure,’” Bailey said.