With a small staff consumed by day-to-day operations, the city of Donalsonville needed help examining its hotel-motel tax collection when revenue began to drop. Enlisting GMA for help, Donalsonville City Manager Marty Shingler says that after a meeting with the hotel and motel owners to clarify the tax laws, his city afterward saw an increase in ongoing tax collection – and even collected some back taxes that they were owed.
Shingler took some time to chat with GMA about why cities need to keep a close eye on their hotel-motel tax collection – even if they are a smaller city.
What kinds of challenges were you facing with your hotel and motel tax recovery?
Donalson Citiy Manager Marty Shingler and City Clerk Denise Childree.
The biggest problem was that we didn’t believe we were getting accurate numbers from the hotels. During the first few years when we used to administer the hotel-motel tax collection ourselves, we seemed to collect those taxes fairly well. Then the amount of tax revenue began to drop, and we suspected that we were probably not getting the correct numbers.
As an example, one of the requirements in our city ordinance states that hotels and motels must submit a copy of their state tax return to the city. Yet, some of the hotels and motels told us things like they were submitting all of that information online. The bottom line is that we weren’t getting the required information in the correct fashion. Revenue continued to drop, but the hotel-motel tax rates had not changed. Something was wrong. And because we’re a very small city with a small staff, we did not have time to track this information down.
What have been the most beneficial aspects of the hotel-motel tax recovery service that have helped you the most?
When GMA told us about their hotel and motel tax recovery program, we had nothing to lose. We decided to at least give it one year and see what happened. From the inception of the service, our hotel and motel tax collection improved dramatically.
The strongest shot in the arm happened when GMA organized a meeting at city hall with all of the hotel and motel owners. GMA explained exactly what the hotels and motels were able to do under the law. Tax collection soon began to improve and the hotels and motels got in line with the program. Everything has gone well ever since.
GMA sends us monthly hotel-motel tax revenue reports that show us what we received, and the reports contain some accounting steps that we were not able to do with our staff. These monthly reports show us our tax collection data along with each hotel’s and motel’s revenue.
We’re also informed about any sudden change in hotel-motel revenue that doesn’t correlate with revenue trends from nearby cities. At that point, we know that some issue is probably going on with one of the hotels or motels. GMA will step in with a phone call, letter, or email, they’ll investigate, and they might audit the hotel or motel.
What results have you seen from using this service?
Most importantly, we’re collecting more revenue than we did before. We’ve even collected some back revenue that GMA called to our attention. Remember, your city has laws about hotel-motel tax collection. If the hotels and motels aren’t complying— if they’re collecting that money and not reporting it—then they’re stealing it from your city.
This hotel-motel tax recovery service definitely works. Any city that feels like they’re not getting the hotel-motel tax revenue that they ought to be getting should definitely give the service a try for at least a year. Cities will likely see a significant increase in their hotel-motel tax revenue, which makes the small investment with GMA worth it.