Transient Occupancy Tax Audits, Transient Occupancy Tax Calendar Year 2018 Summary of Audits

COUNTY OF SAN LUIS OBISPO BOARD OF SUPERVISORS AGENDA ITEM TRANSMITTAL (1) DEPARTMENT (2) MEETING DATE (3) CONTACT/PHONE Auditor - Controller - 11/19/2019 Mark Maier (805) 781-4267 Treasurer -Tax Collector Kerry Bailey (805) 788-2979 (4) SUBJECT Report of the annual fiscal and compliance audits of establishments subject to the County Transient Occupancy Tax Ordinance for calendar year 2018. All Districts. (5) RECOMMENDED ACTION It is recommended that the Board receive the item and file. (6) FUNDING SOURCE(S) (7) CURRENT YEAR FINANCIAL (8) ANNUAL FINANCIAL (9) BUDGETED? N/A IMPACT IMPACT Yes $0.00 $0.00 (10) AGENDA PLACEMENT { X } Consent { } Presentation { } Hearing (Time Est. _______) { } Board Business (Time Est.______) (11) EXECUTED DOCUMENTS { } Resolutions { } Contracts { } Ordinances { X } N/A (12) OUTLINE AGREEMENT REQUISITION NUMBER (OAR) (13) BUDGET ADJUSTMENT REQUIRED? BAR ID Number: N/A { } 4/5th's Vote Required {X} N/A (14) LOCATION MAP (15) BUSINESS IMPACT STATEMENT? (16) AGENDA ITEM HISTORY N/A No { } N/A Date __9/11/2018________________ (17) ADMINISTRATIVE OFFICE REVIEW Nikki J. Schmidt (18) SUPERVISOR DISTRICT(S) All Districts Page 1 of 3 COUNTY OF SAN LUIS OBISPO TO: Board of Supervisors FROM: James W. Hamilton, CPA, Auditor - Controller - Treasurer -Tax Collector DATE: 11/19/2019 SUBJECT: Report of the annual fiscal and compliance audits of establishments subject to the County Transient Occupancy Tax Ordinance for calendar year 2018. All Districts. RECOMMENDATION It is recommended that the Board receive the item and file. DISCUSSION The County currently collects a 9% Transient Occupancy Tax (TOT) and a 1% Tourism Marketing District (TMD) assessment from 1,825 lodging establishments throughout the unincorporated area. 1,277 establishments collect and remit an additional 2% San Luis Obispo County Business Improvement District (BID) assessment. The purpose of our audits was to determine the accuracy of the transient occupancy related amounts remitted to the County and to verify that the tax and assessments were calculated in accordance with Chapters 3.08 and 3.09 of the San Luis Obispo County Code and County Resolution 2015-153. To achieve our purpose, we reviewed the 2018 calendar year TOT returns submitted by 6 establishments and compared the returns to supporting documentation. In addition, we evaluated the existence and posting of current business licenses. Of the six establishments audited, two establishments were determined to owe a total of $8,785 in TOT, BID, TMD, penalties, and interest to the County. One establishment overpaid $10,713 in TOT, BID, and TMD, and was issued a refund. We have attached our Summary of Monetary Audit Findings with details by establishment. We also found the majority of establishments were in compliance with obtaining and posting the required business licenses. OTHER AGENCY INVOLVEMENT/IMPACT Individualized audit reports were issued to each establishment. The Auditor-Controller-Treasurer-Tax Collector is responsible for the enforcement of all audit findings and recommendations. Page 2 of 3 FINANCIAL CONSIDERATIONS The County collected the following total amounts for calendar year 2018: Transient Occupancy Tax $11,137,433 Tourism Marketing District Assessment $2,163,565 Business Improvement District Assessment $1,237,273 RESULTS Annual fiscal and compliance reviews of TOT along with BID and TMD assessments are one of the tools used to monitor receipts of tax and assessments in the unincorporated area. Annual tax and assessment monitoring activities help maintain reporting accountability and contribute to the County's vision of a prosperous and well governed community. ATTACHMENTS 1 Summary of Audit Findings Transient Occupancy Tax CY 2018 Page 3 of 3 SUMMARY OF MONETARY AUDIT FINDINGS TAXABLE REVENUES AMOUNT DUE BY AUDIT FINDINGS % OF CALENDAR YEAR REPORTED TAXES/FEES TOTAL ESTABLISHMENT * AUDITED REPORTED AUDITED DIFFERENCE AMOUNT DUE /(REFUND) PENALTIES INTEREST DUE/(REFUND) 1 2016, 2017, 2018 855,126 765,849 (89,277) -10.4% (10,713) - - (10,713) 2 2016, 2017, 2018 200,543 262,488 61,945 30.9% 6 ,195 1,239 62 7,495 3 ● 2018 112,670 103,693 (8,977) -8.0% ∞ - - - 4 ● 2018 166,087 166,087 0 0.0% - - - - 5 2018 2,672,533 2,672,533 (0) 0.0% - - - - 6 2017, 2018 1,386,896 1,395,780 8,884 0.6% 1 ,066 213 11 1,290 $ 5,393,855 $ 5,366,431 (27,425) $ (3,453) $ 1,452 $ 73 $ (1,928) * Establishment names have not been included for purposes of confidentially. ● Establishment did not post the business license in a conspicuous place or posted business license was not current. ∞ No refund is recommended because the proprietor was unable to provide complete supporting documentation. NOTE: The Transient Occupancy Tax (TOT) rate for 1/1/18 to 12/31/18 is 9%, the SLOCTBID rate is 2%, and the TMD is 1%. Page 1 of 1