Horry County is projected to be up to $200,000 short in its accommodations tax collection this year because of an ongoing reporting issue by business owners to the state.
The state collects, on behalf of the county, more than $4.1 million annually through its accommodations tax, or A-Tax, which state law requires to be used for services such as law enforcement, traffic control, highway and street maintenance and promotion of tourism.
Horry County’s third-quarter check from A-Tax was below what was estimated and if its fourth-quarter check follows suit, the fund could be short by up to $200,000. That is why the county will vote Tuesday to transfer the same amount from the local hospitality tax fund, which is projected to have a surplus.
At the root of the $200,000 shortfall is a filing issue where business owners who own properties in multiple counties only mark on their filing forms one of the counties. For instance, a hotel company may be based in Horry County, but have properties in Georgetown County. If the business does not acknowledge that some of its properties are in Georgetown County, A-Tax contributions will not make it to Georgetown County.
Barry Spivey, finance director for Horry County, said a taxpayer filed an amended return that indicated in past years, payments that were being filed as Horry County payments are now being divided among multiple jurisdictions.
“We had received money earlier that we should not have received,” Spivey said. “So that makes a pretty large difference in the revenues that we have experienced so far this year.”
Anne Wright, assistant county administrator for administration, said the county has been working to identify properties with businesses in multiple counties to avoid these shortfalls from happening again.
“We’ve been communicating as we analyze and see that there’s inaccurate distribution,” Wright said. “But the issue is the [Department of Revenue] requires that the taxpayer go back and amend their filing in order for them to re-distribute.”
Jean Funches, taxpayer advocate at the S.C. Department of Revenue, said a business that reports to multiple jurisdictions must file the Form ST-3T, Accommodations Report by County or Municipality, by paper to allocate the funds correctly.
“DOR is working to incorporate that form into our eSales electronic filing process. Taxpayers who file using the [Sales Electronic Data Interchange] system can file their ST3T electronically. Whether filing by paper or online, it is the taxpayer’s responsibility to report the appropriate jurisdictions where they have accommodations rentals.”
Funches said the department is constantly working toward improving its process to ensure the correct amount and allocation is reported. She said it also audits internet websites advertising rentals as well as online travel companies.
Funches said coastal counties like Horry and Georgetown tend to face more A-Tax challenges like this one.
“It is more prevalent in coastal communities due to the number of accommodation accounts,” she said.
Sel Hemingway, county administrator for Georgetown County, called the process of receiving the quarterly check and then the supporting paperwork weeks later “less than desirable,” adding the process is challenging for counties to pair the A-Tax increase or decrease to the properties that have been added or deleted from the county’s previous A-Tax payment.
“It’s happened a number of times historically,” Hemingway said. “It’s almost like you just accept what you get at the time and then, later on, you receive documentation.”
Hemingway said he was aware of Horry County’s shortfall, but he has not heard whether Georgetown County will be receiving any of that money.
“I know that a flag has gone up and presented some indication that Horry has decided that they have been shorted to the tune of $200,000,” Hemingway said. “We have not seen a payment that indicates that we have received $200,000 or that we should have.”
Hemingway said he has spoken with Horry County Administrator Chris Eldridge about meeting with state revenue officials to identify any properties that may be filing incorrectly.
Spivey said the error in filing has not always gone against Horry County.
“We’ve seen multiple adjustments over the last two years that have been quite large,” Spivey said. “In 2012, we actually got $1.7 million of what used to be somebody else’s money.”