'Slipped through the cracks': Treasurer says hundreds of entities likely dodging Somerset County hotel tax

Apr. 15—SOMERSET, Pa. — For years, Somerset County has collected as much as $1.5 million annually through its hotel tax to promote tourism and trails.

That total might be significantly short of what the county is actually owed, Treasurer Anthony DeLuca said.

While the Somerset County Treasurer's Office has collected quarterly checks in recent years from 131 hotels, bed and breakfasts, and other "short-term" lodging providers, he said that's probably only a fraction of the total number of providers who should be paying the tax.

"I knew there had to be more," said DeLuca, who took office in January, noting that the region's most high-profile and fully compliant providers, such as hotels and Seven Springs Mountain Resort, quickly added up on their own.

But the number of "home stay" properties advertised online that benefit from proximity to the area's slopes, lakes and other outdoor getaways seems to be increasing all the time, he said.

A search Thursday on one website for the weekend of June 11 showed 182 properties available for short-term rent in central Somerset County alone, ranging from private homes to condos, farmhouses and even individual bedrooms. That number did not include properties that had already been rented.

In recent weeks, two research companies that DeLuca approached provided preliminary data suggesting that as many as 600 entities should be paying the tax, well over four times the county's 2021 tally.

"There's no telling how much money we've lost over the years — how much slipped through the cracks," he said.

Over the past few weeks, DeLuca said his own research has already uncovered more than 30 short-term stay providers that have not paid the fee, which is part of the fee imposed for someone to rent a room.

Many, he said, are individuals renting their properties to tourists for short stays in the boroughs and townships near Seven Springs, Hidden Valley Resort and Indian Lake. Some, he said, have masqueraded as nonprofits, yet seem to solely operate as rental businesses.

"The hotels and motels are good," DeLuca said. "Almost all of them pay on time and give us information that we request."

But when it comes to businesses that rely on lodging websites such as AirBnB, HomeAway and VRBO, whether or not rental providers pay the lodging tax depends on the information they provide to those companies, he said.

The multinational e-businesses collect tax revenue from those who play by the rules and then forward it to respective counties — through a process that DeLuca would like to see become more detailed.

Pennsylvania's counties have been imposing hotel taxes for the past 20 years. Cambria County, in 2016, and Somerset County, in 2018, raised those taxes to 5% to increase revenue to support tourism marketing and support.

In Somerset, the annual total is split three ways, with one-third used to maintain and develop county trails, including the ongoing September 11 National Memorial Trail effort. Another third is reserved for marketing and promotion grants in the county, giving local businesses and nonprofits money each year that they can use to advertise their offerings in other regions as a way to draw visitors.

The remaining third goes to support Go! Laurel Highlands, the nonprofit visitors' bureau founded to market Somerset, Fayette and Westmoreland counties, said Rebecca Canavan, Somerset County finance director.

She said the county collected more than $1.51 million through the tax in 2021. It was a rebound from a down year due to pandemic closures in 2020.

Under county guidelines adopted in 2018, the treasurer's office is also able to collect a 4% administrative fee from the tax.

Canavan said she supports DeLuca's effort to investigate the apparent hotel tax shortfall and is curious to see what he discovers.

"I told (DeLuca) to go for it," she said.

'We will be able to find most of them'

DeLuca said more than $400,000 of last year's hotel tax total came through online homestay businesses such as AirBnB. He expects that total will grow as he continues to look into online rentals listed countywide.

DeLuca said the companies have measures in place to identify when a rental provider should be paying a tax and where it should go.

But he also recognizes that leaders of multi-billion-dollar companies are perhaps too busy to research whether the owners of a short-term rental home near a rural Somerset County ski resort might have made an error or are being straightforward about their business.

He said he's pressing for more itemized information from those companies, beyond just bottom-line checks, to enable him to track compliance.

But in the meantime, he's already found numerous rental property businesses that haven't registered for the program and has forwarded them Hotel Tax forms to complete. As of Thursday, 200 addresses are on his desk as establishments that have not registered with the treasurer's office, he said.

"There are many more that will take time, but I believe we will be able to find most of them," DeLuca said, noting that he's planning to handle the matter in-house.

Next door to the Great Allegheny Passage trail in Confluence, The Parker House bed and breakfast operator Mary Aukerman has welcomed hikers, bikers and other tourists for 22 years.

When Parker House opened, there were three properties offering lodging in the trail town. Now there are more than 20, she said.

"Guests have way more choices now," she said, "and the challenge is that no matter what the taxes are, you know the customer can only afford so much."

Aukerman indicated she doesn't greet the hotel tax with nearly as much joy as she does her guests. But she said she pays it faithfully regardless, recognizing that the levy provides some support to the industry that she relies on.

"We all should be playing by the same rules," Aukerman said after she was informed by a reporter about DeLuca's investigation. "If we're going to pay it, everyone should be paying their fair share."