Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Audit topic
No spam. Unsubscribe anytime.
Little Falls staff urges restoring restaurant and lodging tax audits; council to consider funding increase
Summary
City staff told the Little Falls City Council that the city’s restaurant and lodging audit practice has lapsed since 2021 and recommended increasing the small 5% administrative set-aside so audits can resume in 2026; councilors pressed staff on identifying short-term rentals (Airbnb) and whether tourism/CVB funds cover audit costs.
City staff briefed the Little Falls City Council on Nov. 3, saying the city’s routine audits of restaurants and lodging have not been performed in several years and recommending the city increase the small administrative fund used to pay for audits so they can resume in 2026.
Sonia, a city staff member who gave the presentation, said the city’s formal policy (Policy 47) dates to 1996 and that the last full audit was done in 2021. “As we get new restaurants or hotels in the city, we are notified primarily based on utility billing updates,” she told the council and explained the city logs businesses in a tracking spreadsheet and performs monthly reviews to identify nonpayers.
Sonia said year-to-date collections through October were about $88,000 in lodging tax and $118,000 in restaurant tax; at the current 5% administrative allocation that yields roughly $10,300 to cover audit costs, and a vendor quote for the package of audits was $5,000. She recommended increasing the amount the city may use from that administrative pot and starting audits in 2026 rather than during the holiday season.
Council members asked about short-term rental (Airbnb) compliance and how the city would identify and verify operators. “It’s difficult to find who is doing an Airbnb,” a council member said; Sonia replied the city’s current triggers and verification processes are limited and that staff had not completed a full enforcement plan for short-term rentals.
A resident who spoke during public comment urged the council to act on Airbnbs, saying, “Airbnbs have been operating in the city for over 15 years and none of them have been audited and none of them are inspected,” and raised safety and insurance concerns, including the absence of consistent smoke-alarm and inspection requirements for such units.
Council members also sought clarity about how the 5% administrative fee is spent and whether some of the funds are paying chamber or tourism/CVB audit costs. Staff and several members said the dollars discussed were specific to the tourism/CVB (tourism) budget rather than the chamber’s general operating funds.
Next steps: staff will return with a recommendation to increase the city’s available administrative funds for audits and a proposed timeline for beginning audits in 2026, and the council agreed to include the item on a future agenda for formal action.
