Attorney General’s opinion states Tourist Commission must recover back taxes
By Carolyn Roy, email@example.com
The City Council has entered the controversy over taxes that were not collected on a “value added” package at Chateau St. Denis Hotel. The “value added” package is a mandatory $9.99 charged by the hotel to customers on each room occupied to cover such services as a fitness and business center, Wifi, parking and other amenities. The issue is that the Natchitoches Tax Commission did not collect tax from the hotel on the “value added” package from the time it opened in December of 2016 until July 1, of this year. A recent attorney general’s opinion requested by the Natchitoches Parish Tourist Commission said the “value added” package was taxable and the Tourist Commission “must” seek to recover back taxes.
The taxes not collected on the $9.99 “value added package” included a 2 percent TIF tax, 5.5 percent City sales tax and a 3 percent Convention and Visitors Bureau tax. There is no accurate estimate of the amount of back taxes since there is no account of how many hotel rooms were occupied. At the City Council meeting Tuesday, Councilman Eddie Harrington offered a resolution to ask the Natchitoches Tax Commission to provide the City Council with a written response citing legal reasons why the commission did not collect City and TIF taxes on the “value added” package; why the commission cannot begin collecting the back taxes; or work out a compromise with the hotel on the unpaid taxes.
Councilman Dale Nielsen voted no on the resolution with Lawrence Batiste and Sylvia Morrow voting yes. Nielsen said it appeared to him the matter was a tax commission problem and not a City problem. Councilman-at-Large Don Mims did not vote because he was acting mayor in the absence of Lee Posey.
Hotelier Jay Sharplin opened the discussion during the pre-meeting saying that a recent La. Attorney General’s opinion stated the Natchitoches Parish Tourist Commission “must attempt to recover unpaid taxes” on the “value added” package. Sharplin said he believed the opinion would also include back tax owed to the City as well and asked if the City would attempt to collect it. City Attorney Ronald Corkern said his original understanding was that the $9.99 was not taxable when the matter was discussed with Tax Commissioner Jerry McWherter in January of 2017. He said then Finance Director Pat Jones and McWherter met with the CFO of the group that owns the hotel. He said McWherter got information from the hotel owner’s group in New Orleans that the package was not taxable and he would not collect the tax.
Corkern said it operated that way until McWherter began collecting the tax July 1. Corkern said it was McWherter’s position that he would stand by his original decision and would not collect the back taxes. Sharplin said he and other hotel owners expressed their concerns to the City and to McWherter as early as January of 2017 that the taxes were owed and should be collected. Sharplin said he and the hotel owners had communicated with Mayor Lee Posey about the tax in letters. He believes that the recent attorney general’s opinion that the package is taxable confirms that the taxes should have been collected all along. He said it took him only one day to get a decision from the Dept. of Revenue in 2017 that the “value added” package was taxable. “We pay our bills and our taxes,” Sharplin told the council. “All I ask is that you do the right thing.”
Sharplin said that he and other hotel owners at Interstate 49 had been asked by Posey to increase the 2 percent TIF tax they charge their customers to help support the new recreation complex. He said they were reluctant to do so if the City did not collect the back taxes owed by the hotel. Sharplin questioned if the tax commission board could direct McWherter to collect the back taxes “or hit the bricks.” There are two representatives on the tax commission board from the City, Parish Government and School Board. Posey is one of the City’s board members. Harrington said it was not disputed that the City had been shortchanged by the tax not being collected. He asked if McWherter had a legal basis for not collecting the tax and said the hotel had relied on his decision that they did not have to pay.
He said it appeared the tax commission may owe the back taxes and asked if the commission had liability insurance for errors. Harrington said if the City collected “every penny from mom and pop” businesses then the back taxes needed to be paid by the hotel or tax commission insurance. Harrington then motioned for the resolution that passed. In previous stories about the attorney general’s opinion, McWherter told the Natchitoches Times he had no comment until the Tourist Commission meeting scheduled Nov. 20
In other business, the council introduced a request to rezone 5386 University Parkway from B-3 Commercial to B-A for Ribfin Smokehouse and Restaurant to obtain a license for on-premises alcohol consumption. The location is near McDonald’s and Chevron west of I-49. The council voted to approve the lease of property at Natchitoches Regional Airport to Air Data Solutions and grant a franchise to Phillip Paul Lohr for Paul’s Party Boats for a tour boat on Cane River. The council approved a resolution to allow issuing $1.5 million in bonds for the recreation complex. The bid for the park was $13.7 million, more than the $12.5 million first requested. The bonds will be issued rather than paying the difference from reserves. The City will close Nov. 22-23 for Thanksgiving.
The next City Council meeting will be Nov. 26.