Unauthorized tax collection cost taxpayers $100,000 - WMC Action News 5 - Memphis, Tennessee

Unauthorized tax collection cost taxpayers $100,000

(WMC-TV) - A hotel tax that has been off the books for nearly one year is still being collected in Mississippi hotels. But that is all about to change.

Human error. That is how a Mississippi legislator explains how an expired hotel tax has been collected for almost a year without authorization.

It was a slip-up that cost Hornlake, Mississippi taxpayers almost $100,000 in a hotel tax that expired in July 2011.

"They were not authorized by the legislature to collect that tax, so we will have to return those funds," said Mississippi Auditor's Office Director of Communications Lisa Shoemaker.

Ridhash Patel is a front desk attendant at the Motel 6 on Goodman Road. He says the 1.5 percent tourism tax costs customers about $2 each night.

"It adds up over time, especially if you frequent hotels a lot," said Patel.

When customers see their bill including tax, Patel said they usually have the same reaction.

"They're like ‘Oh it's that much?' and we're like ‘Yeah'", he said.

Many people who come to town for the Beale Street Music Festival and Memphis in May travel across state lines because of the lower sales tax. Many hotel owners WMC-TV spoke with says charging those customers the expired tourism tax seems deceptive.

"If we could we wouldn't, but we have to do whatever the state requires us we do or else we get fined," explained Patel.

Representative Pat Nelson says the hotel tax bill is generally renewed every four years but was somehow overlooked. The Mississippi Auditor's Office is now holding the funds in an escrow account separate from city revenue.

"It doesn't even matter if they were to renew the bill moving forward, they were not authorized to collect the tax in the fiscal year 2012," said Shoemaker.

For those guests who have lodged in Horn Lake over the past year.

"We are going to have to recover those funds and return them to the appropriate people," Shoemaker explained.

Kathy Waterbury with the Mississippi Department of Revenue assured that hand-delivered notifications to cease collections will go out next week to all Horn Lake establishments imposing the tourism tax.

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