Developments at the state level are encouraging to local officials who are hoping to see greater accountability concerning tax revenue from online hotel booking services.
The Pine Bluff Civic Auditorium Complex and Advertising and Tourist Promotion commissions — which fund the Convention Center, Visitor’s Bureau and other local tourism programs — rely on taxes on hotel and restaurant sales.
Convention Center Director Bob Purvis said the commissions have been involved in a lawsuit for several years with online hotel booking websites that he suspects are charging the tax to customers, but not turning over the full tax amount to the commissions and pocketing the rest.
Purvis said Tuesday at the commissions’ joint finance meeting that he has been contacted by officials from the the Arkansas Department of Finance and Administration, who are now also pursuing the issue. The state is not joining Pine Bluff’s ongoing lawsuit, but Purvis is hopeful that the legal tactics pursued by the state will address the issue to the benefit of all Arkansas cities with advertising and promotion taxes and governing bodies.
“I think they’ve finally figured out we’re talking about millions of dollars in unpaid taxes, so the Department of Finance and Administration is now interested in joining in that legal effort to try to recoup taxes that are collected by the online booking companies and kept rather than being paid over to the taxing authorities,” Purvis said.
Independent reporting for Pine Bluff & Jefferson County since 1879.
Purvis said that the state has more resources and pressures that they can apply to the issue than any individual city.
“So we think that’s going to help our case,” Purvis said.
Purvis said that the issue is nationwide, and lawsuits have been filed in every state. However, no final ruling has been made in the cases.
The companies could characterize the charge as a “fee,” but are not, calling it a “tax” instead, Purvis said.
“It’s been established in the law over the years that if you charge somebody a ‘tax,’ you owe that tax to the established authority,” Purvis said.
Purvis said that part of the local ongoing lawsuit is a request to the companies involved for access to records showing how the amount for the “tax” charge is being calculated to see if the full amount is actually being charged and remitted to the commissions.
“We think that’s many tens of thousands of dollars that would be paid to us and millions to come to the state,” Purvis said.
In other business, Purvis said that the commissions will likely schedule a called meeting in early December to consider the 2012 budget for the Convention Center and the commissions. Purvis said he does not expect there to be many changes in the budget proposal compared to the 2011 budget.
In other business, the committee reviewed the Convention Center October financial report. Total revenues were $110,170, which was $23,518 less than budgeted. Total expenses were $124,113, which was $3,566 less than budgeted. For the year to date, the Convention Center revenues exceed expenses by $122,093.