PHILIPSBURG TOWN COUNCIL MINUTES
January 25TH, 2024, AT 9:00 AM
RESORT TAX WORKING MEETING
Council in attendance: Carl Sundstrom, Jason White, Gary Fujinami, and Lorraine Dell-Bishop. Council absent: Mayor Daniel Reddish, Scott Lyons, and John Laigaie. Others in attendance: Clerk Rachel Parret, Elena Gagliano, Amelia Wood, Cathy Smith, Anne Fillmore, Shirley Beck, Dale Siegford, and Tom Rue.
Call to order: Councilman Sundstrom called the meeting to order at 9:00am.
Councilman Sundstrom explained that the Council would be reviewing Red Lodge’s Resort Tax.
Councilman Sundstrom called Red Lodge to get better clarification of their Resort Tax. Red Lodge estimates that their revenue from the Resort Tax will be over $1 million. The Town has not had any problems with confidentiality. When reviewing the business owners tax submissions, the Town will ask if the numbers are correct and make sure business owners turn in their taxes for the quarter. Red Lodge has a governing board made up of their Mayor and Town Council, a tax committee of citizens and business owners to go over concerns, and then the committee reports to the governing board.
A Resort Tax Association has been established and they will help any city or town with Resort Tax questions.
Mr. Overstreet reviewed some questions that the Town had submitted to him.
Can the Town Council decline to Tax some of the types of business otherwise subject to tax? Yes per MCA 7-6-1503 (2)(a).
Are gym memberships subject to the Resort Tax? No per MCA 7-6-1503 (2)(a).
Are Federal or State Non-Profit Entities Excluded from the Resort Tax? No
Does the Resort Tax apply to short-term rentals as well as long-term rentals? Only short-term rentals per MCA 7-6-1503 (2)(a)(1),
Does the Resort apply regardless of the duration of the existence of the business? Yes per MCA 7-6-1502 and MCA 7-6-1503(2).
Does the Resort Tax apply to online sales? Probably but its complicated per MCA 15-8-408 and Administrative Rules of Montana 42.21.161.(2).
Can the Town recoup its auditing cost? Yes per MCA 7-6-1505(1)(c).
Can the Town “pause” the Resort Tax dues to an emergency? Yes. See Carter v. Montana Department of Transportation, 247 Montana 39, 905 page 2d 1102 (1995).
Does the ordinance imposing a Resort Tax describe the use of funds in terms of percentages of the amount collected? Yes.
Can the percentages be changed? Yes, with an amending ordinance by the Town Council.
Red Lodge Resort Tax Ordinance No. 952, 1st Amended:
Retail – Anything with logos that represent the Town will be taxed.
Shirley Beck asked if the PIA would have to pay tax on signage at the rink. Councilman White replied that the PIA is a nonprofit and that nonprofits should not be taxed.
Councilman Sundstrom stated that the Council will determine what will be taxed according to MCA. Councilman Sundstrom also stated that the Council doesn’t want to be known as money hungry and that the Council has a responsibility to educate the public.
Shirley Beck respectfully asked the Council to use visitors not tourists, as 70% of the visitors that come to Town are from Montana.
Elena Gagliano asked why the Town Council was examining Resort Taxes from other Towns with larger populations. She asked what the population of Red Lodge, Columbia Falls, and Virgina City. Clerk Rachel Parret responded with Red Lodge has a population of 2339, Columbia Falls 5545, and Virgina City 661. Councilman Sundstrom stated that the Resort Tax is not based on population.
Hotels, motels and any other lodging or camping facilities – All goods sold, conference or convention fees (except for nonprofits), lodging based on less than 30 days will be taxed.
Luxuries – Attractions – will be taxed.
-All goods and services with exception of unprepared food items, arcades, bowling centers, concerts with exception of nonprofit fundraisers, movie theater and concessions, and event and entertainment tickets as well as cover charges.
Rentals – Automobiles, trucks, trailers, RV’s, ect.., golf equipment, ski rentals, snowboard, snowshoe, and other sports equipment, motorcycles, bicycles, ATVs, snowmobiles, boats, jet skis, ect..
Retail sales of goods (excluding wholesale goods sold for resale) – will be taxed.
-New clothing items that been either screen-printed, embroidered, or otherwise imprinted with designs of Town now or Montana, Curios, decorative boxes, decorative vases, cut flowers and floral arrangements, artificial trees and plants, fireworks, jewelry and art, pictures and pictures frames, posters, prints, handcrafted cards, souvenirs items.
Sporting goods (except for firearms) – will be taxed.
Nonfood items – will be taxed.
-Stickers, perfume, cologne, and other luxury bath items, all tobacco, nicotine, excluding FDA approved nicotine replacement therapy. All marijuana dispensaries excluding marijuana prescribed by a physician. New toys (puzzles, cards, and board games).
Food Item – will be taxed.
-All deli and bakery items with exception of loaves of bread, sliced meats and cheeses, foodstuff intended for immediate human consumption, single sized beverages less than two liters (expect for milk), gum and candy, including individual, bulk and packed quantities
Recreational services including tours, guides and outfitters – will be taxed.
Restaurants, fast food, and other food services establishments – will be taxed.
Nonprofit organizations – will only be taxed on selling food and beverages or renting their facilities to the public or nonmembers.
Taverns, bars, nightclubs, lounges, and other public establishments serving beer, wine, liquor, or other alcoholic beverages – will be taxed.
Taxes collected by businesses in any month are to be remitted to the city on or before the 20th day of the following the end of the calendar quarter months: January, April, July, and October.
The City shall accept no good or service in lieu of tax collection.
At the discretion of the Mayor, payment arrangements may be made through the City Clerks Office.
A business may choose to pay its resort tax monthly.
Collection Duties and Responsibilities –
The Office of the City Clerk is responsible for receiving and accounting for the Resort Tax receipts.
The Mayor and his or her agents shall be responsible for enforcing the collection of the Resort Tax. (Philipsburg does not have agents)
Records and Tax Forms –
Forms: Confidentiality: The City shall provide each business in the City responsible for tax collection with proper forms for reporting and remittance to the City. Remittance to the City of the Resort Tax shall be tabulated and accounted for on forms prescribed and furnished to the business by the City. The records and forms held by the City shall be confidential and shall not be open to inspection by the public unless so ordered by the City Council or a court of competent jurisdiction.
Preservation of Records: Every business is required to collect and remit the Resort Tax shall keep and preserve for a period of not less than three years all records necessary to determine the verity of the taxes collected and remitted and shall make the same available for audit or inspection by the City at all reasonable times.
Periodic random audits shall be conducted under the direction of the Mayor or his/her designated representative. Business shall maintain records sufficient to validate compliance with this chapter. All business shall cooperate in all respects in the conducting of the audits. Failure to cooperate shall constitute a violation of the provisions of this chapter.
Use of Tax Monies –
The tax monies derived from the Resort Tax may be appropriated by the City Council only for those activities, in those proportions, set forth below:
Property tax reduction for taxpayers of the City in an amount equal to 5% of the 3% Resort Tax revenues derived from the preceding fiscal year.
Ninety-five percent of the 3% tax revenue must be utilized for capital improvements to street, alleys, water, sewer, stormwater, emergency services, trails, parks, recreational facilities, city beautification, debt repayment, and operational and maintenance cost related to streets, alleys, urban forestry, trails, parks, recreational facilities and city beautification expenditures.
The 1% resort tax shall only be utilized on the infrastructure projects related to stormwater related improvements including, but not limited to, stormwater pipes, stormwater detention, curbs, gutters, sidewalks and streets related to stormwater projects.
Property Tax Relief –
In the event the City receives more Resort Tax revenues than had been included in the annual municipal budget, it shall establish a municipal property tax relief fund, and all Resort Tax revenues received in excess of budget amount must be placed in the fund. The entire fund must be used to replace municipal property taxes in the ensuing fiscal year.
Any business or organization may appeal to the City Council any assessment of penalty or interest.
Resort Tax Committee –
Recommend improvements to elected officials.
Educate public and stakeholders on the Resort Tax
Soliciting public and stakeholder feedback on Resort Tax administration and Resort Tax expenditures.
Making recommendations regarding expenditures to elect officials by collecting systematically collected public feedback prior to the annual review of the City budget.
Bonding and Collections –
Every business, subject to the Resort Tax must provide a bond in the amount of $500.00. The bond shall be issues by a surety company licensed to conduct business within the State of Montana.
Failure to report taxes due, failure to remit taxes due, and any other violation of this chapter, following penalties and process shall be imposed:
First: 30 day grace period
Second: Expiration of 30 day grace period resulting in a $250.00 penalty charge.
Third: More than 60 days an additional $500.00 penalty charge.
Fourth: Failure to comply after 90 day the City may pursue other remedies
Insufficient funds will be charged $50.00
Elena Gagliano asked if Red Lodge had a tax board. Councilman Sundstrom replied that Red Lodge has an advisory board and he also believe that the Council should establish their own advisory board.
Dale Siegford would not advise having a nonresident on the advisory board.
Shirley Beck asked if storage units will be taxed. Councilman White replied that he thinks storage units could be considered a necessity of life.
Next Meeting –
Thursday February 1st, 2024, at 9:00 am
Working meeting. Council members going over what should be taxed and exempt items.
Councilman Fujinami made a motion to adjourn, Councilwoman Dell-Bishop seconded the motion, and the motion passed unanimously.