OIG No. 23-03: Resort Tax Audit Activities SummaryJoseph M. Centorino, Inspector General
TO:
FROM:
April 3, 2023
Honorable Mayor and Members of the City Commission
Joseph M. Centorino, Inspector General
PROJECT
PERIOD:
Resort Tax Audit Activities Summary
OIG No. 23-03
October 1, 2022 through March 31, 2023
Within the Office of the Inspector General's Audit Division are Tax Auditors who verify the
compliance of registered businesses with the City Code's Resort Tax provisions. They conduct
audits of both annual filers and monthly filers. Annual filers generally involve apartment buildings
that typically remit little or no resort taxes to the City due to the frequency of exemptions for
continuous residencies exceeding six months. Monthly filers include hotels, nightclubs, and
restaurants, which have frequent daily transactions for which resort taxes are due to the City.
Annual filers are required to file once per year for the period of May through April by May 20"
(adjusted for weekends and holidays), while monthly filers must file each month prior to or on May
20th (adjusted for weekends and holidays). The objective of these audits is to determine whether
registered taxpayers have accurately reported their revenues and timely remitted any taxes due.
The Finance Department determined that there were 4,130 active Resort Tax accounts as of
March 31, 2023, comprised of 913 annual filers and 3,217 monthly filers. The number of monthly
accounts has increased significantly over the past several years due primarily to short-term
rentals.
As the annual filers are expected to remit little or no resort taxes, OIG's primary focus is to conduct
audits of monthly filers. However, OIG routinely conducts audits of annual filers, concentrating
primarily on determining whether tested apartment building tenants satisfy the requirement
imposed by City Code Section 102-308(3) that there be a continuous length of residency for longer
than six months to be exempt from taxation.
Although the OIG determines the assessment (if any) for any taxpayer based on its audit, it is not
involved thereafter in the collection phase, which is initiated by the Finance Department and may
lead to adjustment, appeal, settlement or other resolution involving other City processes and
agencies. This process helps achieve a proper segregation of duties between the department
performing the audit and those enforcing the assessment.
It should be noted that assessments are not always paid timely and may result in liens being
imposed by the City on local properties owned by the delinquent taxpayers or corporate officers.
These liens may remain in effect for up to twenty years. Collected assessments based on OIG
audits represent additional revenues to the City that would otherwise not have been received if
the audits had not been performed.
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In addition, City Code Section 102-311(6) states as follows: "If any operator charged in this
section fails or refuses to make his records available for inspection so that no audit or
examination has been made of the books and records of such operator or person, fails or
refuses to register as an operator, or fails to make a report and pay the tax as provided by this
division, or makes a grossly incorrect report, or makes a report that is false or fraudulent, it shall
be the duty of the city to make an assessment from an estimate based upon the best information
then available to it for the taxable period of sales or rentals, together with interest, plus penalty,
if such have accrued, as the case may be. Then the city shall proceed to collect such taxes,
interest and penalty on the basis of such assessment, which shall be considered prima facie
correct; and the burden to show the contrary shall rest with the operator."
These estimated assessments are levied when the taxpayer has opted not to cooperate after
repeated attempts and/or has not maintained the required supporting documentation. If the
taxpayer subsequently provides the required records, the assigned Tax Auditor will review the
information provided and revise the estimated assessment as warranted. Some taxpayers pay
the estimated assessments, or else fail to respond to or refute the assessments, which renders
them final.
In sum, Tax Auditors completed a total of 97 audits between October 1, 2022 and March 31, 2023
with net assessments levied of $1,432,831.87. The following points provide a more specific
breakdown, separated by annual and monthly filers, of the number of completed audits and their
corresponding assessments:
A. Annual Filers - 13 audits completed with assessments totaling $82,203.28
1. Five taxpayers did not provide the requested records which resulted in estimated
assessments totaling $81,807.28
2. Seven completed audits resulted in $0.00 assessments as no material differences
were noted from the amounts reported and remitted
3. One completed audit of an annual filer resulted in an assessment of $396.00
B. Monthly Filers - 84 audits completed with assessments totaling $1,350,628.59
1. Six taxpayers did not provide the requested records which resulted in estimated
assessments totaling $405,273.57
2. Thirty-one completed audits resulted in $0.00 assessments as no material
differences were noted from the amounts reported and remitted
3. Forty-seven completed audits resulted in assessments levied ranging from a low
of $146.57 to a high of $205,625.17 and totaling $945,355.02
Respectfully submitted,
nno~~pector Genera;
Mark Coolidge, Chief Auditor
·~.
Date
04/03/023
Date
OFFICE OF THE INSPECTOR GENERAL, City of Miami Beach
1130 Washington Avenue, 6 Floor, Miami Beach, FL 33139
Tel: 305.673.7020 • Hotline: 786.897.1111
Email: CityofMiamiBeachOIG@miamibeachfl.gov
Website: www.mbinspectorgeneral.com
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