Modesto seeks unpaid taxes from motel

The Modesto City Council is expected to affirm Tuesday that the Budgetel Inns & Suites owes the city tens of thousands of dollars in delinquent taxes and penalties and demand payment within 72 hours.

But Budgetel assistant general manager Sofia Nisha said Sunday that the McHenry Avenue motel cannot pay what it owes that soon and repeated a request she and other Budgetel officials made at the council’s May 3 meeting for a payment plan. She said the motel could pay the city about $30,000 this month and the balance over several months.

Budgetel officials at the May 3 meeting were appealing a January 2015 city decision that the motel owed the city $101,304 in unpaid transit occupancy taxes and penalties from June 2009 through January 2015. The taxes are what lodging establishments are required to charge guests and then pay to the city. Modesto’s tax is 9 percent of the room rate.

Budgetel officials gave city officials at the meeting two cashier’s checks totaling $33,000, reducing what they owed to $68,304, and asked for a payment plan to pay off the balance.

They did not dispute owing the city money but cited extenuating circumstances, such as paying for expensive repairs to bring the motel up to city standards. But Senior Deputy City Attorney John Goulart said the Budgetel has been inconsistent in paying its taxes despite repeated efforts by the city to work with the motel.

City officials also said at the May 3 meeting that the Budgetel has racked up about $97,000 more in unpaid taxes and penalties since the January 2015 decision. That amount is not part of the appeal or what the council may demand be paid within 72 hours.

About half of the roughly $198,000 that the Budgetel owes Modesto is for delinquent transient occupancy taxes and the rest is for penalties, including what the city calls fraud penalties.

It’s not clear what the city could do if the Budgetel does not pay in 72 hours. Goulart said at the May 3 meeting that the city has limited options. For instance, he said, the city’s code does not allow Modesto to revoke Budgetel’s business license over nonpayment. But he has said the city could sue to seek payment.

The Budgetel and its parent company, United Resorts LLC, owe back taxes to other government agencies. The Internal Revenue Service filed two liens this year against United Resorts for $108,943, and the California Employment Development Department filed four tax liens in 2014 and 2015 against United Resorts for $20,138, according to documents filed with the Stanislaus County clerk-recorder’s office. The liens are for taxes, interest and penalties.

Nisha said Sunday that Budgetel and United Resorts are working with the IRS and EDD to resolve the liens.

United Resorts operates but does not own the Budgetel. The property is owned by the Khatri Brothers Partnership of Modesto.

The council meets at 5:30 p.m. in the basement chambers of Tenth Street Place, 1010 10th St.

This story was originally published May 22, 2016 at 5:57 PM with the headline "Modesto seeks unpaid taxes from motel."