Audit: hotels owe Onondaga County more than $318K in room-occupancy taxes

SYRACUSE — Some hotels and motels owe Onondaga County more than $318,000 in room-occupancy taxes.

Onondaga County Comptroller Martin Masterpole on March 10 released the findings of an audit on Onondaga County’s hotel/motel room occupancy tax. 

The report covered 46 hotels and motels for the period of 2017 through 2018 and found Onondaga County is due $318,047 in underreported revenue. 

The figure includes $223,346.56 in taxes, $60,961.71 in penalties and $33,739.64 in interest, per the report.

Of the hotels and motels audited, 36 were not in compliance with the auditing criteria, the audit report said.

Onondaga County’s law on hotel room occupancy tax (ROT) permits the county to collect a 5 percent room-rental tax on the per-diem rental charge, Masterpole’s office said. In 2017, Onondaga County collected ROT of $6.6 million and in 2018, collected $7.1 million from 114 operators.

The objective of the ROT audits is to determine if the operators are accurately reporting all required room occupancy taxes to the commissioner, the report said. Any difference between the amount required to be collected by the operators during the audit period and the amounts they actually reported are identified and reported to the commissioner.

“It is our department’s responsibility to ensure hotel/motel operators are in compliance with accurately reporting all required ROT to the commissioner of finance,” Masterpole said. “The numerous audits performed by my staff continue to find underreported revenue for the benefit of Onondaga County taxpayers. I appreciate the efforts of my team and the assistance of the county finance department.”

Criteria for each ROT audit includes all relevant laws, regulations, contracts, standards, measures, expected performance, defined business practices, and benchmarks against which performance is compared or evaluated. 

Finding and recommendations

Of the 46 ROT audits conducted during the audit period, 10 hotel/motel operators were in compliance with the criteria, and 36 operators were not in compliance with the criteria. 

Of the operators that were not in compliance, one underpaid due to adding the same guests more than one time to taxable revenue.

The audit also found 17 did not retain proper tax-exempt documentation to support quarterly ROT returns; three did not file and pay room occupancy taxes when they were due; and 31 were using incorrect figures to determine their room occupancy taxes.

Several operators had multiple compliance issues and the findings were discussed with the management for the individual hotel/motel operators, according to the audit report.

The law 

The Onondaga County law requires the hotel and motel operators to pay the room occupancy taxes collected to the commissioner of finance quarterly, which is recorded within the county general fund, per the report.

Onondaga County collected room occupancy taxes of $6.6 million in 2017; $7.1 million in 2018; and $7.1 million in 2019 from about 114 operators. The number of operators “fluctuates” from year to year. During the audited time period, the top 10 hotels and motels contributed about 36 percent of the revenue collected. 

The county comptroller maintains a two-year rotating ROT audit schedule for the operators located in Onondaga County.

Onondaga County on Dec. 1, 1975 adopted the hotel room occupancy tax, which permitted the county to collect a 2 percent room-rental tax on the per-diem rental charge. This local law was amended in 1983, increasing the room-rental tax from 2 percent to 3 percent, and then from 3 percent to 5 percent in 1991, per the county comptroller’s report.