Possible changes coming to Cookeville’s hotel/motel tax ordinance, as the city tries to deal with delinquent payments.
The Council will consider an ordinance that would make it unlawful for a hotel to operate if its occupancy tax is delinquent. City Clerk Darian Coons said most hotels are paying on time, while some are frequently delinquent and have attempted to pay with bad checks.
“What we are looking to do with some of these changes is to add some tools for our attorneys so that we can collect that delinquent occupancy tax,” Coons said.
Coons said last fiscal year, the city collected over a million dollars in occupancy tax, with about 10 percent of the collection delinquent taxes from prior years. Council Member Eric Walker said he would like to see a time limit added to the amended ordinance to clarify when a hotel cannot operate due to delinquencies.
“If our policy is to wait 30 days is to wait 30-days let’s state that in our policy, that way it’s crystal clear and it doesn’t feel subjective to the business owner,” Walker said. “And I’m okay with shortening that time period for second offenses within a year, you know, and so if you have been late, if this is your second delinquency, it is immediate.”
Another change in the ordinance would require a delinquent hotel owner to have an audit performed. Attorney Danny Rader said there would be a penalty if an audit discovered significant discrepancies.
“It’s essentially what you would find is that somebody has been underreporting their occupancy and therefore not paying the tax,” Rader said. “But presumably they are collecting it from the customer, so it’s really theft from their end customer and the city.”
The hotel owner would be liable for the cost of the audit. Other changes state that the hotel owner would be liable for the city’s cost of collection if the city files suit in court to collect the delinquent occupancy tax, and require hotels to maintain a registered agent and office where legal notices can be served.