Many hotels not paying city proper tax

AUSTIN (KXAN) - Hotels in Austin stand to do a lot of business in March thanks to South By Southwest, Texas Relays, the NCAA tournament and several other big events and festivals.

But while they are making money, many are not paying the city the collected payments for the hotel occupancy tax.

“We are seeing that hotels are not making the full payments or they are over-claiming the exemptions they are supposed to have,” said Austin city auditor Ken Mory.

Each hotel room stay in Austin comes with a 9 percent tax to benefit conventions and tourism.

But just because a customer pays the tax does not mean it is benefiting its designated purpose.

“It would be fair to say quite a few hotels are not making payments. I'm not sure it is a majority, but it is quite a few,” said Mory.

An audit of five hotels last week revealed that all five had not paid the owed amount to the city and the total of missing payments amounted to $177,467.

It is a problem that has been occurring for years.

Since 2005, audits have discovered approximately $2.1 million in funds not paid by various hotels.

The auditor’s office has tried to collect missing payments once they are identified and has also fined violators, but the problem persists.

“At this point it is really not improving that much. We continue to have issues.”

Mory believes a lack of education about the tax is largely to blame. Hotel employment and ownership can have rapid turnover and large corporately-owned chains with hotels worldwide may not be familiar with the tax in Austin or state of Texas exemptions.

“In some cases, they don’t know better,” said Mory. “We have to get the word out there where payment is not being made and we need to enforce it and encourage people to make their payments.”

Mory thinks educating and developing awareness of the tax is the best way to collect proper payments, but said a lack of auditor resources to conduct audits make it difficult to keep up with violations when they may occur.