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Your hospitality business is small, with a single hotel or locations in only a few tax jurisdictions. Your accountant is taking care of compliance quite well, with the help of a local, seasonal tax specialist. But as you grow, expanding to another state, another region, it’s time to seek tax expertise.

Hiring an in-house state and local tax professional is often part of the evolution of a hospitality business. Its decision criterion is generally the same as that of any other position, arrived at through a cost-benefit analysis, and there are any number of metrics that can be used. For example, you can look at your tax bill and decide that it’s worth the price of a salary to reduce it. You can look at your consultants’ bill and decide that having your own tax specialist would be cost-effective.

But ending the decision criteria there can leave you open to unexpected down-the-road costs as the reality of operating in widespread locations becomes apparent. You have to look toward the future because, as a tax burden grows, the importance of hiring a tax specialist who is conversant with a hospitality company’s needs and nuances can have an increasingly positive impact on the bottom line.

There is even a potential decision path that can correspond to a company’s evolution. While the company’s needs can often be satisfied by an outside tax consultant, continued growth can require in-house local and state tax professionals. More growth can justify a tax team that includes property, sales and use, hospitality and personal property tax specialists. Eventually, it’s possible that the tax team will need help from consultants capable of dealing with local issues that impact the various properties.

These are some of the key highlights of a recent Hotel Executive Magazine guest article by David Chitlik, Altus Group’s Vice President, Hospitality. David was recently asked to be on the editorial board of this publication. This article is the first in a series where he will cover a wide range of hospitality property tax topics.

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