BENTONVILLE — City restaurants and hotels could soon have to apply for a new license.
The Bentonville Advertising and Promotion Commission voted Thursday to research requiring restaurants and hotels to be licensed through the commission.
The license would be free, regulated by the Convention and Visitors Bureau and ensure those in the hospitality industry pay advertising and promotion taxes, said Kalene Griffith, president/CEO of the Bentonville Convention and Visitors Bureau.
The advertising and promotion tax was established in October 1995. It requires hotels collect a 2 percent tax each time they rent a room. Restaurants collect a 1 percent tax on all prepared foods sold in the city, according to the ordinance.
Restaurants and hotels in the city are required to pay the tax money they collect to the Convention and Visitors Bureau each month, according to the ordinance.
The bureau collects around $1.2 million each year in taxes. That money is used to advertise and promote the city, cover the bureau’s operating expenses and help build parks and facilities, Griffith said.
There are 26 restaurants and three hotels in Bentonville who haven’t paid the tax for a month or more. The estimated amount due is $26,502, according to delinquent accounts maintained by the bureau.
Of those 29 accounts, 13 will be written off as bad debt because those businesses have been closed for two years or more, said Johnna Duncan, finance coordinator for the bureau.
Phone messages left Friday for managers and owners at five of the delinquent businesses were not returned.
The problem with collecting the tax from restaurants and hotels, Griffith said, is twofold.
The ordinance doesn’t include any way to ensure businesses pay the tax. New restaurants and hotels aren’t required to register with the bureau.
“A restaurant can open and we don’t even know about it until we drive by,” Griffith said.
Commission member Chris Sooter agreed.
“The unfortunate thing is (restaurants and hotels) know there are no repercussions,” Sooter said. “We don’t have a big stick to make them pay. So what are we going to do? Sit here and talk bad about them?”
Requiring a license would fix both problems, Griffith said.
Only businesses that collect the tax would be required to have the license, Duncan said. All new restaurants and hotels in the city would be required to have one before opening.
The license would also give the bureau authority to fine restaurants and hotels for each day they are late paying the tax, Duncan said.
Commission member Jim Dotson agreed to allow the bureau to continue its research to see if licensing will help.
“It’s certainly not fair to the public to have (restaurants and hotels) collecting that tax and then not paying it,” Dotson said.
Griffith said she hopes to present a proposal for the advertising and promotion license to members of the City Council within the next six months.