Tuesday, May 15, 2007

State squashes Sullivan's bid to strengthen collection of hotel taxes from non-profits

Sullivan County's burgeoning crackdown on nonprofit groups that skirt local tax laws has met its first obstacle: the New York state Assembly.

The chamber's powerful Ways and Means Committee has balked at a provision that Sullivan hoped would strengthen its ability to collect hotel taxes from lodgings owned by religious institutions and other nonprofits.

The provision, which mirrors Tompkins County's effort to collect more taxes from a hotel operated by Cornell University, was folded into Sullivan's request for state approval to raise both its sales and hotel occupancy taxes.

The language would have put a greater burden on nonprofits to prove that tax-exempt guests had stayed for tax-exempt purposes. Doing so is a critical issue for the cash-strapped county that plays host to numerous nonprofits and religious organizations.

Last year, the 320-bed Raleigh Hotel was purchased by a Brooklyn-based Hasidic group for a weekend retreat. Although its owners have pledged to pay full taxes, the sale highlights Sullivan's interest in beefing up its tax-enforcement powers.

But Assemblywoman Aileen M. Gunther, D-Forestburgh, said questions by Ways and Means staff threatened to stall the county's requested tax hikes in committee. She removed the extra enforcement language.

"This was the only way to get it done fast," said Gunther. The state must pass the tax hike bill within the next three weeks if the county hopes to collect the new revenue during this year's summer tourist season.

The bill would boost the county's hotel occupancy tax to 5 percent from 2 percent. The county expects to raise at least $750,000 a year, up from $300,000 at the current rate.

At the same time, the state will allow Sullivan to increase the county sales tax to 8 percent from 7.5 percent.

Together, the higher taxes are expected to increase county revenue by an estimated $6 million each year.

Sullivan County Manager David Fanslau said the county would consider a local law to give it the enforcement power it seeks against nonprofits. But state Sen. John Bonacic, R-Mount Hope, criticized the Democrat-run Assembly for not enacted the bill as the county originally requested it.

"The bottom line is the Assembly leadership, despite the efforts of the local Assembly member, is protecting their tax-exempt special interests," said Bonacic's counsel, Langdon Chapman.


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