In 2024, Ulster County doubled the occupancy tax rate from 2% to 4% with plans to dedicate 25% of those funds to housing and 25% to transportation. While the rate changed, the rest of the County’s occupancy law remained unmodified from the original 1991 enactment. The occupancy tax law allows operators a partial exemption from occupancy tax for those non-lodging amenities that are included in a guest’s stay without a separate charge.
The audit identified $251,756 in underpaid taxes, penalties, and interest, much of which remains uncollected. Common issues included failure to file, inaccurate filings, misapplied exemption rates and missing documentation. One operator failed to apply the updated 4% tax rate after it took effect in February 2024, resulting in over $21,000 in lost revenue. Nearly 36% of the taxpayer compliance sample had filing errors or unsupported exemption claims.
The audit also found gaps in the administration of occupancy tax as the County relies on disconnected and outdated systems leaving filings unreviewed, payments unmonitored and delinquencies unnoticed for extended periods. In one case, a major taxpayer failed to file or pay for nearly a year before the issue was flagged during our audit.
“Ulster County residents, visitors, and lodging operators deserve a tax system that is fair, modern, and transparent,” said Comptroller March Gallagher. “While the County continues to meet its occupancy tax revenue targets, inconsistent enforcement and outdated laws have created uncertainty and allowed avoidable losses. With anticipated cuts to federal aid, Ulster County must do better in collecting revenues it is already owed to preserve essential service delivery to County residents.”
