The Buncombe Tourism Development Authority voted April 26 to recommend waiving about $15,000 in penalties for an Asheville bed-and-breakfast owner who didn’t pay occupancy taxes for 21 months.
Board members Andrew Celwyn and HP Patel voted against the motion. Micheal Lusick and Scott Patel were not at the meeting.
If the Buncombe County Board of Commissioners take the BCTDA’s recommendation, owner Dean Whiteford still will owe almost $6,000 in late fees in what was the largest waiver request several board members could remember seeing during their board tenure.
All outstanding occupancy taxes — about $60,000 for that time period — were paid in full as of April 4, according to the Buncombe County Finance Department. Buncombe County occupancy tax is 6% on gross receipts for any accommodation in the county.
Whiteford and his wife, who have never worked in hospitality before, bought Abbington Green Bed and Breakfast for $2.2 million in June 2021, and said he didn’t know he was supposed to pay occupancy taxes on his property until February. He said no one told him he had to pay occupancy taxes on the bed-and-breakfast, and the software company he used for booking mislabeled the tax as “Buncombe County sales tax” in the online portal.
So all the taxes — state and county sales tax and occupancy tax — were being collected correctly through his ResNexus reservation system, and being deposited in his account. He said he assumed the rates being collected were correct, paid his sales taxes on time and didn’t notice the difference between what was collected as taxes and what he paid. He didn’t know he had to report occupancy taxes to the Buncombe County Tax Department, a claim that raised suspicions from several board members.
“At no point in the six years that I’ve been coming to the meetings, I’ve never had another hotel, motel, Airbnb or [bed-and-breakfast] show up and say, Hey, we didn’t know that,” Celwyn said.
Matthew Lehman, board member and treasurer, said he was surprised that Whiteford hadn’t heard of occupancy taxes before, a common tax across the country.
“There’s no disrespect intended. But if you Google ‘what taxes do I have to pay to operate a bed-and-breakfast’ in Buncombe County, the first thing that pops up is the explanation of the occupancy tax,” Lehman said.
According to the bed-and-breakfast website, Whiteford, who grew up in Australia and has lived in Hong Kong and New York City, previously worked for some of the biggest accounting firms as well as global law firms during a 30-plus year career.
The county did not send a notice to Whiteford because the previous owner sold the business and the account was closed, said Mason Scott, assistant finance director for Buncombe County and interim BCTDA fiscal agent.
Tax Collector Jennifer Pike confirmed to Xpress that there is no county policy for when to send occupancy tax reminders.
“You’re lucky if you take over an existing business that has a CPA and a bookkeeper, and you’re just kind of grandfathered in to stay on the track. In his situation, the business was not operating,” said Randy Claybrook, membership chair of the Asheville Bed and Breakfast Association at the meeting.
“On a monthly basis, you have to manually go to the Buncombe County tax website and report your gross sales. And so if you’re a new business person, and you don’t know there’s a website out there to do that, no one would ever tell you. And that’s where he’s gotten caught,” Claybrook continued.
Ultimately, the board voted to forgive the reporting penalties, but keep the late fees on his bill to avoid setting a precedent. HP Patel dissented because he thought all penalties should have been forgiven.
“I truly believe this was an oversight on the owner’s part. Even though this should have not been overlooked for as many months as it was, the owner was not purposely trying to evade the tax and has fully paid up once the error was discovered. Being a small business owner myself, I can sympathize with his predicament,” said Board member HP Patel in an email to Xpress.
In other news
The BCTDA is considering investing monies set aside for grant recipients in the Tourism Product Development Fund in a state investment pool.
Funds set aside in the TPDF are awarded as grants on an annual basis but are paid out over an extended timeline, according to the finance committee’s presentation April 26.
“We wanted to look at the opportunity for that idle cash to generate more money for more projects,” Lehman said.
The BCTDA’s cash is currently held in a standard county checking account and state-sponsored money market trust fund, according to the presentation.
Lehman recommended investing in the N.C. Investment Pool, which was created in 2021 by Buncombe and Wake counties.
The pool would allow for withdrawals and deposits within 24 hours and protect the principal, Lehman said.
Alternatives include hiring a dedicated investment adviser to seek safe, varied investments with high liquidity, Lehman said.
“The idea to fund a whole other project with money we never had for the community is really exciting,” Mosher said.
A final decision will be made when the board discusses the budget at the May 31 meeting.
HP Patel ( don’t know who this person is) is a principled person. He or she stayed true to their ethical values by voting NO to NOT discharging ALL penalty payments. A decent decision would have recognized the honest intentions of these small business owners and done what HP was arguing for. Incredibly, some Board members appear incapable of recognizing that the backbone of Asheville’s economy are the small hospitality owners.
HP Patel (I do not know who that is)is a principled person. He or she voted against the motion to waive only a portion of the late fees, rather than dismiss the total amount, which would seem to be the right decision.
The Whiteford’s story is certainly plausible. Small businesses like theirs are the backbone of Asheville’s economy. So why did some Board members view their explanation as suspicious? Projection?