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After one local hotel has failed to pay any innkeepers’ tax yet this year, the collection point for the innkeepers’ tax will change from the Kosciusko County Treasurer’s Office to the Indiana Department of Revenue, effective Jan. 1.
At the Kosciusko County Council meeting Thursday night, County Treasurer Michelle Puckett presented an ordinance amending the innkeepers’ tax collections.
She explained, “Currently, the treasurer’s office is in charge of collecting the tax for room rentals for the county. So, this ordinance we’re asking to change the collection point from the treasurer’s office to the Indiana Department of Revenue (DOR).”
She said the reason they’re wanting to do that is because the DOR has different enforcement and accountability aspects that the county doesn’t at the local level.
“So, today we’re just coming and asking for your consideration to do so,” she stated.
Councilman Joe Irwin asked if they would still be tracking the funds. Puckett said they would and the DOR would let them know each month what the county received in all of the rentals.
“We do have a good history to track to make sure that those are not reducing,” Puckett responded. “They do just give us one bulk number, but if we do request it, they will give us the itemized hotels individually as we do them. And for the beginning of this process, because what will happen, if this is approved, I’ll contact the Department of Revenue and this would be effective Jan. 1. So it’s the treasurer’s responsibility to contact all the hoteliers and let them know that this process will be changing effective Jan. 1. They then will submit their county innkeepers tax on the Department of Revenue side.”
All of the hotels currently use the Department of Revenue site to submit their Indiana sales tax. “So they said, basically, it’s a second drop-down option that will be county innkeepers’ tax, so all of these entities are already registered with the Department of Revenue, they will just file their reporting and file those taxes with them,” Puckett explained.
However, she said it’s up to the county to work with the hoteliers to make sure they transition, especially in the first three to four months.
“I would get that itemized list to make sure that everybody has transitioned, and if not, help them with that process,” she said.
When they pay, the DOR will let Puckett know the details of who paid and how much. “Since we have been collecting this for a long time, probably since the ’90s, we have a good record so we know how much people are paying. The Department of Revenue does not retain anything on their end to collect this.”
She said her department had a perfect storm of a lot of issues this year with one specific hotel that, to date, has paid nothing.
“But, again, the accountability aspect we just do not have that here, whereas the Department of Revenue, if they do not pay their innkeepers’ tax, they have all the same tools available to them as if you don’t pay your income tax,” Puckett said. “They have a way of making sure people pay those things.”
Irwin said he was all about the enforcement part, but he just wanted to make sure Puckett knew what was supposed to come back to the county.
Councilwoman Kimberly Cates asked what the turnaround time was and if there was a fee from the DOR to do this. Puckett said there is no fee for the DOR to do this on the county’s behalf, and the turnaround is 30 days.
“The way it sits now is, people have until the 20th of the next month to file for the previous. So, right now, we’re in October so they have until Oct. 20 to then turnaround and file their remittance for September. So by the 30th of October, the Department of Revenue will send us that month, so it’s only about a 10-day delay from what we’re seeing currently,” Puckett stated.
Councilman Will Stockdale asked how much time is the treasurer’s office spending now to collect the innkeepers’ tax. Puckett said they’re spending a substantial amount of time, especially this year because they had issues with one specific hotel. She estimated about 10 hours a week.
“It’s very frustrating when we are held responsible to be the collectors of the tax and we don’t have a true solid way to enforce it. We are currently working with the county attorney on this one specific hotel. Friends, that’s not free, so there is a price tag associated with any legal assistance that we get from the county attorney,” she said.
At a certain point, she said it’ll be turned over to the county prosecuting attorney’s office.
“Again, utilizing those resources to pay for a tax, but it is a long haul to get from beginning to end and, again, quite the delay, whereas the Department of Revenue, if you’re 30 days late, they know you’re 30 days late and they are starting to take action,” she said.
The DOR will follow whatever ordinance the county has in place. The delinquencies the county is dealing with now will continue to be the county’s responsibility to collect those, and DOR will start Jan. 1.
Cates said the change will save county employee time and legal fees.
Councilwoman Rachael Rhoades asked if other counties are moving towards using DOR for collecting the innkeepers’ tax. Puckett said there are 17 other counties that utilize the DOR, including Allen, Brown and Marion counties.
“They do collect all of our Airbnb, all of our online rentals currently, and just send us that check once a month. But then this would expand to all of our local rooms and such,” she said.
All the funding goes to the Kosciusko County Convention and Recreation Visitors Commission.
Rhoades made a motion to approve the ordinance, with a second from Councilman Dave Wolkins. The motion passed 7-0.
