Rio Arriba County hotels, motels and bed and breaksfast owners who have failed to pay the lodger’s tax should beware. The County has begun auditing suspected scofflaws.
County Commission Chairman Alfredo Montoya said the County has been too trusting of hotels to correctly report the number of rooms they offer, operating on an “honor system.” According to state law, establishments with fewer than three rooms are exempt from the tax, and Montoya said he thinks some places are under-representing the number of rooms they have for rent.
For example, the Casa Escondida in Chimayó has not been paying the tax, according to County documents, but the bed and breakfast’s web site touts its eight guest rooms. Records show the Oso Lodge, south of Chama, has not been paying, either, but its site states it has six bedrooms.
“We’ve been inattentive,” Montoya said.
Casa Escondida owner Belinda Bowling said the County recently contacted her to tell her about the tax and inquire about the number of rooms at her bed and breakfast. She said she hasn’t received further instruction about paying the tax, but she thinks she may become involved in how it is spent now that she is more aware of it. She said business owners in the County should have access to the funds.
“I just think that it could be better utilized,” she said. “If the money was actually made available to the small businesses for things like the art tours or wine tasting tours or things that would actually bring people into the community and encourage them to spend money.”
The Stone House Lodge, near Heron Lake, is another establishment on the County’s list. Owner Marilyn Morrison said the Lodge has 11 units that sleep between two and 20 people each. She said the Lodge has been full all summer, and the County recently contacted her about the lodgers’ tax. Morrison said in 25 years of operating the Lodge, she was unaware she was supposed to pay the tax.
“I got all the information that I needed,” she said. “I have no objection.”
Morrison said she hopes once she starts paying the tax the money is used to benefit her area, especially Heron and El Vado lakes. Representatives of the Oso Lodge did not return calls seeking comment.
The County collects 3 percent of the cost of someone’s overnight stay and puts it into a fund to be spent on encouraging tourists to visit the County through advertising and otherwise promoting attractions. The tax is expected to generate $28,000 this fiscal year, according to the County budget, and it carried $38,704 over from last year.
According to County documents, $34,924 was spent from the lodgers’ tax fund last year to promote events like studio art tours, the Española Farmers’ Market, the Oñate Visitor Center and the Española Fiesta.
Montoya said he thinks some hotels aren’t even registered as businesses, and he asked the County Planning and Zoning and Finance departments to work together to identify and audit places that may not be in compliance with the law. He said in addressing violators, the County should begin by simply informing them they need to pay the tax and register as a business if they have not already. State law allows the district attorney to bring enforcement actions against noncompliant vendors.
Montoya said the County believes some places in the northeastern part of the County should be paying the tax but are not.
“There are a number that we know of,” he said.
State law allows for “random” audits of vendors to verify the lodgers’ tax is being paid. County Planning Director Patricio Garcia said his department suspects some places near Abiquiú and Tierra Amarilla that advertise one or two available rooms may have more, so the Department will work to determine the actual number. He said, with the number of hotels in the County, it could randomly audit a third of the establishments each year, ensuring each one is looked at every three years.
County Comptroller Mary Louise Martinez said the Finance Department hopes to audit at least three hotels by the end of the year, and her office will be contacting all the identified establishments soon. She said 11 places in the County — and outside of municipalities — currently pay the lodgers’ tax, and 23 have been identified that do not. She estimates a quarter of those may have three or more rooms.
“We do need to go and audit each one of them,” she said.
Martinez said at least one place, Las Parras de Abiquiú, only has two rooms but pays the tax, anyway.
Martinez said an audit of the Abiquiú Inn is already in progress, though the County is still waiting for some documentation from the Inn. She said it is impossible to say how much added revenue will result from the County’s actions until the audits take place, because it will depend on how many rooms each establishment has, how often they are occupied and how much they cost to rent.
The County’s five-member Lodgers’ Tax Board, which includes business and hotel owners, is not scheduled to meet until November to decide how to spend the tax money this fiscal year.