Hotel owners may face criminal charges
May 7, 2003
Tax evaders, beware.
City Manager Dave Jinkens said three properties are being investigated by the police department for possible criminal violations. Two of the 18 delinquent properties are on payment plans, he said.
The City Council decided Tuesday to step up its tracking and enforcement of motel-room taxes owed to South Lake Tahoe, agreeing to grant amnesty to 18 delinquent lodging properties if they pay up by July 15.
“I can’t tell you how many times they’ll pay up then become delinquent again,” City Attorney Catherine DiCamillo said after the council meeting.
But she declined to release the names of the properties. The Tahoe Daily Tribune on Tuesday issued the city a California Public Records Act request for the names.
Under the direction of a chief financial officer and auditor, the city has sifted through years of records to find that $666,470 in back transient occupancy taxes has not been collected. Penalties and interest make up almost half that amount.
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The council voted 3-0, with Mayor Judy Brown and Councilman John Upton absent, to give the properties a break on the penalty fees as an incentive to pay in full on the principal and interest. The city charges two 10 percent penalties based on time and another 25 percent if fraud is determined.
As part of the agreement, the property representative would sign a document pledging to remain in compliance for three years.
DiCamillo said the delinquency problem is with the timing. By the time the City Attorney’s Office would discover the city had not been paid, 90 to 120 days had gone by.
The city has taken no legal action against any of the properties.
“I suspect the … properties remaining are already on the verge of bankruptcy, but that’s their problem,” Councilman Tom Davis said during the meeting, while acting as mayor while Brown recovers from surgery. She’ll be back for the next meeting — May 20.
About 140 motels, hotels, vacation-home rental managers and other lodging establishments collect the 10 to 12 percent plus 50 cents every night from their guests. The revenue source for the city and its Redevelopment Agency amounts to a projected $9.8 million in this fiscal year. Almost half of this goes to the agency. The revenue makes up one-quarter of the city’s general fund.
Every dollar is needed to offset looming cuts anticipated once the state passes its budget, Jinkens emphasized. He said the city would have properties prosecuted if fraud is found.
City Treasurer Steve Wysong urged the council to wage an educational campaign that warns violators the city will actively pursue its legal means and try to work with those properties that dispute the amounts.
“What we need to do with any type of program is to encourage voluntary compliance,” he said.
Stephen Reinhard, former city parks and recreation commissioner who ran for the City Council and lost, criticized the city for protecting the hotel and motel owners in town with a “nod and wink.” He took specific aim at the South Lake Tahoe Lodging Association.
Davis countered, saying the group had no say in the proposal in question. Davis and Councilman Hal Cole came up with the concept, he said.
Past lodging President Pete Mac Roberts, who runs the Viking Motor Lodge, said the group wants the violators to pay.
The Lodging Association had asked the city to delay implementing an additional 50-cent hike on the TOT until it collects on delinquent accounts.
At the same time, an El Dorado County Grand Jury investigation into what four local vacation-home rental management firms charge in TOT is still under way. Grand jury foreman Richard Brunner said Tuesday he expects to have findings in June.
On Tuesday, the City Council also agreed to spend $129,085 on a software package that would help record vacation home rentals, along with transient occupancy tax and business license fees.
— Susan Wood can be reached at (530) 542-8009 or via e-mail at email@example.com