LODGING TAX MANAGEMENT
MAKING LODGING TAXES LESS TAXING
The United States is comprised of 50 states, 3000+ counties, 19,000+ cities, and an ever-changing number of special tax districts. In some locations a single tax is collected, while in others multiple taxes are assessed to the room charges.
Understanding and managing the hotel tax burden is complicated and complex. Voyageur Solutions can help you minimize your tax burden by uncovering the value hidden in the tax code.
DO YOU KNOW HOW BIG A BITE YOUR LODGING TAXES ARE TAKING?
Across the country the tax burden on a room stay ranges from 8% to 18.35%.
BNSF Railway lodges over 3,000 crew members across their network every 24 hours. When the Burlington Northern and Santa Fe railroads merged, Dirk led the team that consolidated the two into a single concise lodging program. During the transition, he observed that hotels at the three largest crew change points on the former Santa Fe were charging room and taxes on each occupancy.
Upon further investigation of the applicable tax codes it was determined that in each case the room stays should have been tax exempt. Dirk contacted each hotel and provided them with the tax codes to prove the case for tax exemption. Next, he initiated the tax recovery process and oversaw collection and submittal of the necessary source documents to the taxing authorities reflecting the last three years lodging activity. Upon receipt and examination of the documentation the taxing authorities concurred with the position that the room stays should have been exempted and agreed to refunded previously collected taxes.
The net result was BNSF Railway received an unexpected one-time tax refund of $683,000. While the amount of the one-time refund was significant the real cost savings for BNSF has been on-going tax exemption savings they have continued receive each year. By last calculation the tax exemption savings exceeded three million dollars.
Spending time and resources to explore the lodging tax code is not typically a priority, so these taxes are paid and assumed to be just another cost of doing business. Voyageur Solutions LLC has the experience, resources, and focus to explore your lodging program’s taxes in depth. Our goal is to optimize the tax portion of your lodging program by verifying the correct taxes are being charged, by minimizing your future tax burden through the application of tax exemptions based on your travel activity, and by recovering historical taxes for travel profiles that met the tax exemption criteria.
Voyageur Solutions LLC will analyze your current and historical lodging activity to determine if the profiles qualify for a partial or full tax exemption for your travelers. In instances where tax exemptions should have applied, Voyageur Solutions will manage the recovery process from beginning to end. We will collect, assemble, and create the documentation supporting the recovery claim. Voyageur Solutions will facilitate and manage each step of the tax recovery from the filing process to the actual distribution of any available tax refunds back to you.
Voyageur Solutions provides forward-looking consulting services that review your lodging program to identify opportunities to legally minimize the tax burden applied to your travelers room charges when they check out.
Using our experience, Voyageur Solutions can assist you and the lodging provider in navigating the dynamic tax laws by implementing the necessary compliance factors so that your travelers are no longer transient guests but permanent residents.
For nonprofit organizations, Voyageur Solutions can manage the process to ensure that your preferred hotels have the necessary documentation in hand before your travelers arrive to ensure you are receiving tax exempt status and the resulting savings. If taxes were applied to a room stay, Voyageur Solutions will facilitate and manage each step of the tax recovery for any taxes collected in error.
Companies employ many best practices to ensure their travel program is optimized for efficiency, effectiveness and value. The best managed travel programs have negotiated agreements that specify the rates, amenities and other criteria travelers should expect upon check in. It is not uncommon to have rate audits performed to validate compliance with the contracted terms. However, typically no proactive actions are taken to verify if the taxes collected at check-out are correct.
To address this opportunity, Voyageur Solutions has developed a complete nationwide database of the United States taxing jurisdictions. This database is continuously being updated to reflect the current tax laws as they constantly change. By leveraging this resource, Voyageur Solutions can quickly identify the current taxes charged by each of the respective taxing authorities (State/County/City/Special Taxing Districts). Next we compare this data against your travelers’ expense data to validate that the correct taxes were collected. In instances where tax overage charges occurred, Voyageur Solutions will work with the hotel or, if necessary, the appropriate taxing authority to manage and ultimately secure a reimbursement of funds incorrectly collected if available.
In today’s business environment it is all about the numbers. Smart companies benchmark and trend everything. Again the exception is often lodging taxes. Lodging taxes are ever increasing as communities seek to place the burden of funding their needs on visitors. How does this impact your overall costs?
Utilizing our nationwide tax database Voyageur Solutions is able to generate one-time or periodic reporting which demystifies the lodging tax burden across selected markets or your entire lodging program. In addition, we can provide data to trend the changes and impact of taxes across your travelling destinations.