Fiscal Note
This resolution amends the city's room tax ordinance to defer payment of first quarter 2020 room taxes to no later than July 31, 2020. Interest and penalties are waived for this deferral period. This deferral is in response to the economic impacts associated with the public health emergency related to the COVID-19 disease. Entities subject to the room tax are anticipated to see at least a 90 percent drop in occupancy during the second quarter of 2020, depending on the duration of the public health orders.
The city's room tax is 10 percent of gross receipts collected for the privilege and service of furnishing, at retail, except sales for resale, rooms or lodging to transients by hotelkeepers, motel operators, lodging marketplaces, and other persons furnishing accommodations that are available to the public, irrespective of whether membership is required for the use of the accommodations. Room taxes are due 30 days after the end of a calendar quarter. First quarter taxes are due April 30. First quarter revenues in 2019 were $3.4 million. Penalties for late payment include interest charged at 12 percent per year, a forfeiture of 25% of the room tax paid in the previous year up to a total forfeiture of $5,000, and a $25 late filing fee. The estimated fiscal effect, based on prior year penalties paid along with lost investment earnings on deferral of revenue, is $4,000, during the affected quarter of 2020.
Currently, the city has sufficient cash balances to absorb this potential three month deferral of revenues. No appropriations are required for this one-time change to the room tax collection process.
Title
SUBSTITUTE - Amending Section 4.21(3) of the Madison General Ordinances to defer room taxes imposed for January, February and March, 2020 to no later than July 31, 2020.
Body
DRAFTER'S ANALYSIS: This amendment to the ordinance would authorize the City Treasurer to defer payment of the first quarter of room taxes, due April 30, 2020, to no...
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