What to Do If You’re Audited for Hotel Occupancy Taxes
- Kelly Martinez
- Dec 2, 2024
- 3 min read
Being audited for hotel occupancy taxes (HOT) in San Antonio might seem daunting, but it’s a manageable process if approached with preparation and understanding. The City’s Finance Department routinely conducts these reviews to verify compliance with local tax laws. Here’s a detailed guide to navigating the process based on a real-life experience.
Step 1: Receive the Notice of Review
The audit begins with an email from the San Antonio Finance Department titled Notice of Review. This email will provide the date and time of the review and include instructions for the process. To ensure you receive this notice, keep your contact information, particularly your email address, up to date with the City.
Carefully review the email and any attached documents. These will outline the review process and specify the documentation you’ll need to prepare.
Step 2: Understand the Review Options
The Finance Department offers flexible options for conducting the review:
Electronic Review: Submit all necessary documentation digitally via email.
In-Person Review: Meet at a designated location to present your records.
On-Site Pick-Up: Arrange for auditors to collect the required documentation from your property.
Choose the method that works best for your situation and confirm your preference promptly.
Step 3: Prepare for the Selected Audit Period
For a recent audit, the review period covered 13 months—June 2023 through June 2024. During this time, auditors verify:
Total gross receipts: All income from sleeping accommodations, including room rates, host fees, cleaning fees, and pet fees. Please see examples below of required documents for Airbnb and VRBO.
Exemptions: Records supporting exemptions and long-term stays.
Calculations on your HOT report: Ensure accuracy in reported figures.
The audit’s initial inspection typically takes one day if all requested documentation is available. However, based on findings, the scope may expand, requiring more time and additional records.
Step 4: Provide Documentation
The required documents depend on the review type:
For On-Site Reviews
Auditors will need access to:
A suitable workspace, such as a library or other quiet location, for two people to conduct their review.
Records including:
A completed payout sheet and original documentation supporting gross revenue.
Exemption certificates.
Supporting documentation for all claimed exemptions, including long-term stays.
For Electronic Reviews
You will need to submit detailed records for every reservation completed during the audit period. Organize these documents to ensure they’re easy to understand and verify.
Examples of Airbnb and VRBO Documents:
Step 5: Review the Preliminary Results
Once auditors complete their initial review, they’ll provide preliminary findings and answer any questions you may have. If your records are thorough and align with the HOT reports filed, this phase may conclude the audit.
However, if discrepancies are identified, auditors may require additional time and documentation to expand their review. Cooperate fully to resolve any issues.
Tips for a Smooth Audit Experience
Stay Organized: Maintain detailed records of all transactions, exemptions, and tax payments year-round.
Double-Check Filings: Ensure your HOT reports are accurate before submission.
Communicate Clearly: Respond promptly to any requests or questions from the Finance Department.
Seek Assistance: If needed, consult a tax professional to help prepare your records or address discrepancies.
An audit may seem stressful, but with proper preparation and cooperation, it can be a straightforward process. Keeping accurate and thorough records not only ensures compliance but also makes reviews like these far less challenging.
The information provided is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and reliability of the content, STRASA makes no representations or warranties of any kind, express or implied, about the completeness or accuracy of the information presented.
Short-term rental operators are encouraged to consult with a qualified tax professional or legal advisor to address specific questions or concerns related to hotel occupancy tax audits. The procedures and requirements described may vary depending on individual circumstances, and the City of San Antonio may update its policies or processes without prior notice.
STRASA is not liable for any errors, omissions, or outcomes arising from the use or reliance on the information in this document. Always refer directly to the City of San Antonio's Finance Department for the most current guidance regarding hotel occupancy tax compliance and audits.
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