EL PASO, TEXAS (KFOX14/CBS4) — El Paso officials say years of auditing hotel occupancy taxes have recovered millions of dollars that would have otherwise gone uncollected, but a new internal review shows widespread problems remain across the city’s hotels.
An audit completed April 21st found $1,131,941.83 in hotel occupancy taxes went uncollected across El Paso hotels.
Hotel occupancy taxes are an extra tax added to hotel stays when visitors come to El Paso.
The city’s audit department reviewed 20 hotels and found 19 had deficiencies.
Below is a break down of which hotels were audited organized by how much they owe from highest to least:
Comfort Inn & Suites, El Paso I-10 Airport – $262,687.65Holiday Inn, El Paso Airport – $229,846.22La Quinta Inn by Wyndham, El Paso Cielo Vista – $133,611.33La Quinta Inn by Wyndham, El Paso East Lomaland – $109,783.05Hilton Garden Inn, El Paso Airport – $96,826.47La Quinta Inn & Suites, El Paso East – $87,151.08Candlewood Suites Building 11193/ Holiday Inn Express Guesthouse (These two hotels reported as one entity) – $50,007.40Embassy Suites by Hilton, El Paso – $49,152.40Hyatt Place, El Paso Airport – $42,904.34Residence Inn by Marriott, El Paso – $14,300.28Holiday Inn Express & Suites, El Paso I-10 East – $13,719.20Holiday Inn Express & Suites, El Paso North – $12,548.99Days Inn by Wyndham, El Paso Airport East – $7,803.66Stanton House, El Paso Downtown – $7,635.39Intown Suites Extended Stay, El Paso – $6,534.30Holiday Inn Express & Suites, Sunland Park – $6,393.88Homewood Suites by Hilton, El Paso Airport – $641.09America’s Hotel, El Paso Medical Center – $395.10Total: $1,131,941.83
You can read the full audit below:
The audit found problems including underreported revenue, invalid tax exemptions and unreported fees.
City Chief Financial Officer and Deputy City Manager Robert Cortinas said the city has been conducting hotel occupancy tax audits for about a decade.
“We began this about 10 years ago where we started doing audits on hotels,” Cortinas said.
Julia Spencer El Paso leaders address widespread hotel tax issues uncovered in new audit (Credit: KFOX14)
RECOMMENDED: City outlines El Paso Zoo’s plan to regain national accreditation after maintenance issues
The city audits about 25 to 30 hotels each year on a rotating three-year cycle.
Cortinas said that means hotels are typically reviewed every three years because the city does not have the resources to audit every hotel annually.
“When they do the audits, they’re looking at one, is the hotel collecting appropriately, are they remitting on time?” Cortinas said.
Cortinas said the audits have helped the city recover millions of dollars over the years.
“I think we’re over four million dollars in hotel occupancy tax that hadn’t been provided on time,” he said.
La Quinta Inn, El Paso East Lomaland. (Credit: KFOX14/CBS4)
Cortinas said some hotels may incorrectly report taxes because they do not fully understand the reporting requirements or timelines.
“Sometimes it’s an educational thing,” Cortinas said. “Sometimes it’s the hotel is not doing well. And so they’re just not remitting their hotel occupancy tax.”
“They may be reporting incorrectly because they don’t understand the rule or the reporting timelines,” Cortinas said. “And so it helps them ensure that they’re remitting the hotel occupancy tax appropriately.”
The city’s Office of the Comptroller oversees collections and follows up with hotels identified in the audit.
Cortinas said hotels are given opportunities to provide documentation or appeal findings if they believe the amounts are incorrect.
The city said hotels were notified of the findings on April 23rd, two days after the audit was completed.
KFOX14/CBS4 asked whether any hotels had responded or paid since then, Cortinas responded, “I don’t know. So we just got the report from the internal audit as well. We actually just, earlier today, I just got the report from them. I had not seen it up until that point. So yes, I can’t answer that question right now, but I’m sure that they’re gonna reach out.”
The findings follow a separate audit KFOX14/CBS4 reported on last year that found more than $1 million in unpaid hotel occupancy taxes across 10 El Paso hotels.
Internal Audit on Hotel Occupancy Taxes. (Credit: KFOX14/CBS4)
KFOX14/CBS4 also asked what the city is doing to prevent taxes from going unpaid, Cortinas said enforcement options can eventually escalate to lawsuits or even potential shutdowns.
“I think there’s only so much that we can do to force a hotel to pay other than actually closing them down,” Cortinas said.
He said one hotel previously came close to being shut down after the city obtained a court order over unpaid taxes.
“We were at the point where we actually had a hotel that we had actually got a court order to actually close down that hotel from the court, because the court identified that yes, you do owe this amount, we had not heard or had not received a payment from the hotel owner,” Cortinas said. “And so I said, you know what? Let’s give them one more chance. We already have the court order, we’ll give them one more chance. If we don’t receive payment by the end of the day, we’re gonna follow through and we’re gonna shut the hotel down.”
Cortinas said the collection process can take years because of court proceedings and efforts to contact the correct hotel owners, especially if properties have changed ownership.
Cortinas also adds that penalties and interest are also added when hotel occupancy taxes are not paid on time.
According to Cortinas, the money from hotel occupancy taxes is restricted by the city charter and is primarily used for tourism-related expenses, marketing and city-owned facilities.
Cortinas said hotel occupancy tax revenue helps fund tourism, marketing and city facilities, including the Convention Center and the Abraham Chavez Theatre.
He added that part of the revenue approved by voters in 2012 goes toward paying debt related to the Southwest University Ballpark.
When asked what that tourism funding specifically supports, he pointed to promotion tied to major events and conferences in El Paso.
“The recent BTS concert was a great opportunity for us to do more promotion. The Sun Bowl game that we have every year,” he said. “So that again, getting the word out, marketing, promoting the city to get people to come and visit.”
The president of the El Paso Hotel Lodging Association, Terra Maguregui, also provided the following statement following the release of the audit:
As President of the El Paso Hotel Lodging Association, I cannot speak on behalf of the individual hotels identified in the audit, as each property is independently operated and responsible for its own tax reporting and compliance. What I can say is that Hotel Occupancy Tax compliance is important to our industry and to the continued support of tourism and economic development in El Paso. Audits are part of the normal accountability process, and we encourage any questions or findings to be addressed directly between the City and the individual properties involved.
RECOMMENDED: Commissioners warn immigration enforcement could strain El Paso sheriff staffing, budget
Several hotels named in the audit were contacted by KFOX14/CBS4 for comment, but no responses had been received.
The city of El Paso is scheduled to hold a meeting on Thursday to discuss the audit’s findings.
You can preview the presentation expected to be given below:
Sign up to receive the top interesting stories from in and around our community once daily in your inbox.