City Reiterates 2.5% Tax on RV Park Rentals
The city of Benson, Ariz., is planning to gain more enforcement authority over taxes levied on residents, with a public hearing planned for Monday (Oct. 11), the Benson News Sun reported.
According to the public hearing notice, the purpose will be to receive comments from the public regarding the proposed adoption of “Appendix IV – Modifications to the Model City Tax Code for Cities and Towns in the State Collection System Performing Supplementary Local Audits.”
City Finance Director Jim Cox said in 1987 Benson joined cities throughout the state in adopting a model tax code that would be enforced at the state level. But the state is underfunded and understaffed and when the city is submitting information about a business not paying taxes properly, nothing is being investigated.
“Right now the arrangement is to have state administrators collect taxes and perform audits,” he said. “But state auditors keep losing personnel, and nothing the city has passed up to them has been investigated over the last year.”
The new amendment to the city tax code would still allow state auditors to conduct investigations and collect taxes, but it also gives city officials authority to move forward in areas of concern.
“The way the code is set up now, I can advise people to pay their taxes, but I can’t enforce anything,” Cox said. “This adoption would allow the city and the state both to perform audits.”
If the council approves the amendment following the 7 p.m. public hearing on Oct. 11, Cox said who will be responsible for carrying out the city’s enforcement is still up for discussion.
When questioned about the need for the amendment now, Cox said it’s something he’s wanted to do for a long time. He added there is one current case in the city where this new authority would be used. But by law Cox could not disclose the details.
In a public records request, the News-Sun found that there have been two people asking for information and questioning the city regarding the tax code.
Jay Kendrick and Dianne Tipton, of the Stagecoach Trails Manufactured Home Park, have requested public records and information regarding the tax code dating back to 1966.
The multiple requests include asking for public notices regarding passing the tax codes, minutes from meetings, notices published in the newspaper and other information.
In a phone interview, City Clerk Vicki Vivian said there have been no other inquiries regarding the issue from other business owners or residents.
Cox also sent out a certified letter to more than 20 RV park owners, manufactured-home parks, motels and hotels on Sept. 17, stating that despite what they have heard, they are still required to pay the transaction privilege taxes and bed tax on rental income.
In the letter, Cox said, “Someone has recently contacted many park owners and urged them to stop paying the 2.5% transaction privilege tax on rental income from spaces and homes rented, because the tax “doesn’t apply.” The 2.5%tax does apply to all rental income received from the rent of all your property, whether residential or commercial. In addition, the bed tax applies to all residential rental income from persons spending less than 30 days at your facility.”
When questioned on the issue, Cox said the letter was necessary due to false information being spread.
“I had calls from several different RV parks in town, with the owners asking if it was true they didn’t have to pay a rental transaction tax,” Cox said. “I don’t know how many people were contacted, so I sent a certified letter to all the businesses this impacts. I didn’t really ask who had been making the calls, I just told them not to listen to the false information.”
The bed tax has been a subject of controversy over the last few months, when the City Council tried to approve a 2 percent increase. The approval was later deemed void after proper procedure wasn’t followed in two separate votes.