Centre County to audit accommodations tax compliance

Centre County will be performing audits on businesses that provide overnight accommodations to make sure that they are paying the mandated hotel tax.

The Board of Commissioners approved a contract with ParenteBeard at its meeting Tuesday to perform 10 audits of hospitality businesses. The audits, not to exceed $11,000 by contract, will be paid for by the Central Pennsylvania Convention and Visitors Bureau.

The 2.5 percent tax is collected for each overnight stay and allocated by the board to the bureau for promotional purposes and marketing the county. The fund yielded about $1.65 million last year, Centre County Treasurer Rich Fornicola said.

Fornicola said the audits are not designed to solve a problem or punish anyone, but rather to make sure the tax process is running smoothly. The tax was instituted in 1997, and this is the first such study.

“I don’t think you’re going to find a lot of people who are intentionally out of compliance,” Fornicola said.

The audits will focus on three hotels, two motels, two inns or lodges, and three bed-and-breakfast sites, he said.

Fornicola said the choices represent about 10 percent of the county’s registered businesses that would need to pay the tax. He said businesses will be chosen at random.

The idea had been kicked around by the Visitors Bureau’s board of directors for the past couple of years, Executive Director Betsey Howell said.

Though she said the audits might not need to be performed every year, Howell said the effort could be a good idea to make sure everyone is compliant. The money generated from the tax is a huge boost to the organization, helping to pay for advertising and promotion and office functions, she said.

Commissioner Michael Pipe said hospitality tax audits have been done elsewhere.

“This is a common practice throughout the state,” he said. “It’s not as if Centre County is the only one to do this.”

The audits will make sure the county is doing its due diligence, but won’t solve the problem of unlisted people renting out rooms and failing to go through the necessary steps, Fornicola said.

He said that the majority of people are compliant with the taxes and regulations, but keeping everyone compliant levels the playing field for all businesses.