We have conducted our audit of the Records, Taxes, and Treasury Division’s Tourist Development Tax Collection and Enforcement Section. The objectives of this audit were to determine whether collection processes are adequate, and monies are accounted for properly; to determine whether enforcement is reasonable to ensure that all taxes are collected; and to evaluate the adequacy of the Records, Taxes, and Treasury Division’s audit function.
We conclude that collection processes are adequate, and monies are accounted for properly in accordance with the policies and procedures established for the Tourist Development Tax program. We conclude that enforcement is not adequate to ensure all taxes are collected. We conclude that the audit function is not adequate.
The TDT Section does not utilize all collection efforts available by law resulting in approximately $2.5 Million in uncollected revenue. The TDT Section has employed some collection efforts including placing liens on properties; however, the liens often remain in place for multiple years without collection. Additional collection efforts such as freezing of bank accounts and garnishments are available and provide greater enforcement impact and more timely collection; however, these enforcement mechanisms were not being used by the TDT Section. After we questioned the TDT Section as to whether they use the freezing of bank accounts, they issued several “notice of freeze” for one account in November 2017. However, as of March 22, 2018, no further such notices havebeen issued. In accordance with Section 125.0104(8)(a) Florida Statutes, if the Tax Dealer fails or refuses to charge and collect the tax from the person paying the rental or lease, the Tax Dealer is guilty of a misdemeanor of the first degree, punishable by a term of imprisonment not to exceed one year, in addition to being personally liable for the payment of the tax.
An estimated $354,258 in General Fund monies were used to subsidize the cost of TDT collection and enforcement over the past three years while $4,191,583 in available TDT funds remained unutilized. Pursuant to Section 125.0104(10)(b)5., Florida Statutes, “a portion of the tax collected may be retained by the County for costs of administration, but such portion shall not exceed 3 percent of collections.”
Four County Parks do not remit TDT for their RV Campground activities which is estimated to be $303,962 over a three-year period. These parks, which offer campgrounds that are primarily tailored to RV Camping, are Easterlin, Topeekeegee Yugnee (TY), C.B. Smith, and Markham parks. These parks collectively offer 265 camping sites. We also noted the TDT Section lists eight private RV Parks as tax exempt but lacks adequate support for the exemption status. The TDT Section has not performed adequate enforcement and monitoring of RV Parks.
Audit coverage and practices are inadequate. The current number and frequency of TDT audits performed is inadequate. This is caused by a lack of audit staffing resources and their dual responsibilities performing other administrative and collection functions. Also, no formalized risk assessment and audit plan exists. Additionally, audit project time is not effectively monitored through a time reporting system.
Vacation rental companies, such as Airbnb and HomeAway, are services that facilitate individual property owners renting out their spaces to travelers. Typically, single family and condominium homeowners list their properties with these companies as available for rent on a short-term basis. The Airbnb and HomeAway MOUs do not include provisions which will allow an adequate determination that all applicable taxes have been paid under the agreements, the County does not receive a list of properties included in the total amount remitted. Further, the Audit Rights provisions in both MOUs will not allow for adequate determination of whether all applicable taxes have been remitted. This represents an audit scope restriction that hampers, if not precludes, an audit to ensure taxes have been remitted for all applicable properties that have been rented on a short-term basis.
Our report contains a total of 11 recommendations for improvement. We appreciate the cooperation and assistance provided by the Records, Taxes, and Treasury Division throughout our review process.
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