Jacksonville, FL — The City of Jacksonville isn’t doing enough to ensure certain taxes are being paid by the appropriate parties and of the right amount, according to a new report from the Council Auditor.
The report focuses on Tourist Development and Convention Development taxes, which anyone who rents a living space for six months or less is required to self-report and remit to the Duval County Tax Collector. The Auditor doesn’t have the legal authority to examine the taxes themselves- instead, that is put on the City’s Finance and Administration department. This Audit, therefore, looks at how the City is ensuring these transactions are appropriately taking place. It also recommends the Auditor be given more power to directly examine the tax collections.
Both Jacksonville Chief Administrator Sam Mousa and Chief Deputy Tax Collector Sherry Hall responded to this report, largely agreeing with the findings.
Overall, the report says audits and enforcement are not appropriately taking place right now to ensure everyone who is supposed to be paying these taxes is, in fact, doing that, and that the amounts they’re paying are accurate. The Auditor says there was no evidence of such activity taking place, except for what they say was an occasional review and approval of certain payment plans- and even that hasn’t taken place since 2015.
The Auditor’s report says the Tax Collector is performing some enforcement, including following up on late or incomplete payments. Another finding in the report notes, though, that the Tax Collector does not have standard operating procedures in place for how these follow ups take place. They do also investigate complaints about unregistered short-term rentals.
The response from City and County officials included in the report says all parties plan to work together once there is a new Tax Collector elected to make sure proper auditing and enforcement efforts are taking place.
Another key area that the Auditor is recommending change is how the City deals with “peer-to-peer property rental” companies, like Airbnb. The report says Airbnb offered to enter in to an agreement with the City in February 2016 to ensure people who were renting out properties through them were paying the appropriate taxes. Ultimately, the report says no deal was agreed to, although the report says more than 60% of Florida counties that assess Tourist Development and Convention Development taxes do have an agreement in place with Airbnb.
As a result, the City is believed to be missing out on these collections, either because of a lack of their own enforcement or a lack of awareness by the renters that they have to be paying the taxes. Based on Airbnb’s own reporting of host income in Duval County last year, the Auditor says that could have meant $366,000 in revenue from these taxes.
The response from the City and Tax Collector notes that there are a lot of considerations in an agreement, including zoning changes that would have to take place to allow entities like Airbnb to operate. They want to see a special committee on short term rental matters formed by the Jacksonville City Council, and say an agreement could be possible, depending on those findings.
Airbnb tells WOKV that they always want to help their hosts pay their fair share, and whenever the City or County wants to reengage in conversations, they would be happy to move forward.
There was a calculation error in a computer program, dealing specifically with collections on incomplete or late payments, which was sometimes leading to the amount due from the payee being understated. The City says that is being addressed, as they look to replace the system altogether. The respondents also concurred with an Auditor finding that a small percentage of Tax Collector computer system users had excessive access rights.
Because the Auditor is not able to audit the specific tax collections, there is no specific information on how much the City may be losing out on. The Auditor says Jacksonville collected more than $23 million in FY2016/17 in these two taxes alone. That is money that can be used for maintaining convention centers and sports facilities, financing beach park facilities and beach improvements, and promoting and advertising tourism.
The report says the Auditor’s Office believes an increase in audit and enforcement activities would lead to more revenue from these tax lines.
In addition to recommending the Auditor’s Office gets the legal authority to directly examine the tax collections, the report recommends additional audit work be performed by the City, including identifying unregistered short-term rentals and evaluating the appropriateness of any exemptions.