WITH the tourism industry still in limbo because of the Covid-19 pandemic restrictions, the Department of Finance-Division of Revenue and Taxation was given by the Office of the Public Auditor until Sept. 30, 2021 to address the issues regarding the hotel occupancy tax.
Last year, OPA conducted an audit report to determine if the division had adequate procedures to detect underreported hotel occupancy tax and unlicensed businesses.
According to the report, the division “failed to adopt regulations, which would provide operators with clear guidance for properly collecting hotel occupancy tax, and enable DRT to effectively and equitably enforce the hotel occupancy tax.”
In her report last week, Public Auditor Kina Peter said all the issues pertaining to hotel occupancy tax remain unresolved.
OPA made several recommendations to address these issues, and Finance, according to the report, has until Sept. 30 to resolve them.
These are the OPA recommendations:
• Adopt regulations, which interpret the hotel occupancy tax law’s use of the term “accommodations,” and enable the division’s uniform enforcement of the tax law.
• Adopt procedures for auditing hotel occupancy tax.
• Conduct tax audits of hotel occupancy tax that involve examinations of operator revenue records.
• Implement procedures using the automation capabilities of the tax system for initiating tax audits of the hotel occupancy tax.
• Implement procedures using the automation capabilities of the tax system to routinely identify non-filings or non-filers of hotel occupancy tax and BGRT.
• Implement procedures for staff to immediately notify and request operators to file all missing hotel occupancy tax and BGRT filings.
• Formally require operators to report revenues that are subject to both the hotel occupancy tax and BGRT under a specific business activity code in the monthly BGRT form.
• Implement the automation capabilities of the tax system to streamline the verification of revenues reported in hotel occupancy tax and BGRT forms.
• Promptly review the rules, regulations and laws that impact the division’s enforcement of the hotel occupancy tax law.
• Implement appropriate procedures for uniformly enforcing business license requirements and the hotel occupancy tax law on all operations of short-term lodgings, including operations conducted at private residences.
OPA also said that since August last year, the division has begun taking steps to resolve the issue.
As of Feb. 24, the division developed draft regulations for review and approval. It has determined that audit procedures will be for internal use only and not for publication.
Regarding OPA’s recommendation to conduct hotel occupancy tax audits that involve examinations of hotel operator revenue records, a draft procedure manual is in development for review and approval.
Also ongoing, according to the report, is the development of taxpayer guidelines and enforcement procedures.
