Uniform Innkeepers Tax
The majority of Indiana's convention and visitor's bureaus are organized under what is known as the Indiana Uniform Innkeepers Tax, or Indiana Code 6-9-18. The innkeepers tax language also discussed details on the application of a chapter Indiana Code 6-9-29. Initial legislation was introduced in 1982, with subsequent revisions. The code allows any local entity to adopt IC 6-9-18 and a lodging tax of up to 5 percent, with the tax being used for local tourism development and promotions. Some counties have a higher percent and they are either under their own legislation or have sought special dispensation from the Indiana General Assembly.
Authorized by a County Council, the Uniform Innkeepers Tax code establishes a local tourism authority appointed by various entities within the county to oversee its usage. These tourism commissions are sworn representatives of the community and must act in good faith to use these appropriations as stipulated in the tax code.
To see a complete list of counties that have adopted the tax and the rate each charges, view this list.
To establish a tourism commission (and potentially) a visitor's bureau there are several steps to take:
- Local support from the lodging community that will collect and remit the tax. Hotel and lodging owners in Indiana are very supportive of the innkeepers tax as long as that tax is used appropriately. Studies show a misdirected tax can actually be financially detrimental to the hotels that collect it, which is why local support and understanding about how tourism works is imperative.
- The county must first pass an ordinance that adopts the Indiana Uniform Innkeepers Tax in order to begin collecting.
- Most communities form a task force that includes a representative from the county commissioners and council, which administer the tax, the lodging and attractions industries, community leaders and someone familiar with non-profit management. The Indiana Tourism Association can provide this task force with a mentor to assist in the process. This task force can and should identify and develop:
- The local structure of the tourism commission (this varies depending on the community). Sample structures are available from the ITA. The tourism commission must be formed by a county ordinance from county commission.
- Determine if the commission will handle all services in which case the employees would be considered county employees and would go through the county for all paperwork, but the cost of these services would be paid by the innkeepers tax.
- Determine if the commission will contract with a separate non-profit entity to provide services. If so, then the following will need to happen:
- Articles of incorporation for the local entity that will serve as the "bureau", as well as related documents such as by-laws.
- An application for non-profit status (most bureaus are what is known as 501-c-6 organizations, or trade associations).
- A leadership structure for the organization. Most bureaus have an executive director who runs the bureau and who has expertise in marketing and promotions, and preferably non-profit management.
- Suggested policies and procedures ranging from transparency to audit requirements.
- The tax collection methodology to be used if not determined by the ordinance. The funds can be collected via the state or the local treasurer's office. Most bureaus collect through the local treasurer's office.
- A timeline for the tourism commission and services to begin. Most counties take about a year to plan, which allows for tax collection over the year and seed money for the start-up of the services and/or separate non profit organization.
The ITA can assist with questions, support or documents for any of the above. Contact us here.
Click here to see a sample ordinance.