BILL ANALYSIS
By: Brimer
Local Government Ways & Means
BACKGROUND AND PURPOSE
Under current law, cities are authorized to assess and impose a hotel occupancy tax. The
revenues derived from this tax are used to finance many important tourism development projects
within a municipality. Hotel owners are to collect the occupancy tax, file a quarterly report with
the city, and submit their payment to the city.
Occasionally, hotel owners fail to file their occupancy taxes. When this occurs, a city will make
several attempts to collect. Eventually, if the hotel owner refuses to pay, the city is forced to
take legal action. In 2003, the city of Fort Worth took collection action against twelve hotels for
over $216,000 in delinquent taxes.
Unfortunately, because the hotel has failed to disclose its financial information, the city has no
real admissible evidence of the amount due. The city's only tool is to conduct an audit (at their
own cost) which is often lengthy, expensive, and sometimes controversial. This approach greatly
lengthens the amount of time spent in court and in the discovery process.
C.S.S.B. 174 authorizes a city to hold a hotel operator who has failed to pay his/her taxes liable
for the cost of an audit. C.S.S.B. 174 also authorizes municipalities to use previous years' tax
filings to determine the amount due, authorizes a court to consider previous years' filings as
prima facie evidence of the amount due, and provides that any authority to conduct an audit is in
addition to any other audit authority.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
SECTION 1. Amends Section 351.004, Tax Code, by amending Subsection (a) and adding
Subsections (a-1), (a-2), and (a-3), as follows:
(a) Provides that, in addition to the amount of any tax owed under this chapter, the
person is liable to the municipality for the costs of an audit conducted under Subsection
(a-1)(1), as determined by the municipality using a reasonable rate, but only if the tax has
been delinquent for at least two complete municipal fiscal quarters at the time the audit is
conducted. Renumbers existing sections to reflect addition.
(a-1) Authorizes the municipal attorney or other attorney acting for the municipality to
determine the amount of tax due by certain prescribed procedures if a person required to
file a tax report does not file the report as required by the municipality.
(a-2) Authorizes the municipal attorney or other attorney acting for the municipality to
estimate the amount of tax due by using the tax reports in relation to that hotel filed
during the previous calendar year if the person did not file a tax report under Section
156.151 (Report and Payment). Provides that an estimate made under this subsection is
prima facie evidence of the amount of tax due for that period in relation to that hotel.
(a-3) Provides that the authority to conduct an audit under this section is in addition to
any other audit authority provided by statute, charter, or ordinance.
SECTION 2. Makes application of this Act prospective.
SECTION 3. Effective date: September 1, 2005.
EFFECTIVE DATE
September 1, 2005.