The city of Conroe has contracted with a California-based firm to manage the collection of hotel occupancy tax and even help identify entities that may not be, but should be paying the tax.

The Conroe City Council approved the contract with MuniServices LLC for the initial cost of $7,500 during its Jan. 8 meeting.

According to Collin Boothe, assistant director of finance, an accountant in the finance department has handled the administration of the HOT from area hotels and motels.

“We are recommending this,” Boothe said. “From the finance standpoint, it is going to save us a few costs and it is also going to save us some staff time.”

According to the contract, MuniServices will administer the program and will provide discovery and recovery of HOT, including identifying entities subject to taxation that are not registered and are not paying the tax, including homeowners who rent rooms or homes to vacationers. The company also will work to collect the tax from entities that are delinquent.

Boothe said the city would pay MuniServices a finder’s fee of 40 percent while the city retained the remaining 60 percent.

Hotel occupancy tax is imposed on the rental of a room or space in a hotel costing $15 or more each day, according to the State Comptroller of Public Accounts website. The tax applies not only to hotels and motels, but also to bed and breakfasts, condominiums, apartments and houses. Local hotel taxes apply to sleeping rooms costing $2 or more each day.

The site also states anyone leasing their houses or rooms in their house must collect the tax from their customers in the same way a hotel or motel collects the tax from its guests. Property management companies, online travel companies and other third-party rental companies also may be responsible for collecting the tax.

While MuniServices can provide auditing services of HOT, which Conroe did not do, the initial contract will not include those services. Boothe said the auditing could be done on an as-needed basis.