Many not-for-profit hospitals are aware of the exemptions that they may be eligible to receive on sales tax for hotel invoices, especially those in tax-exempt states. However, it’s important not only to be aware but also to monitor hotel invoices to ensure tax exemptions are correct and save money for your organization.

Issues can arise on hotel invoices, and over time, hotel sales tax billed in error can add up. Hotels may inadvertently bill hospitals for sales tax. Your Accounts Payable department may not be able to distinguish the charges, as tax charges are not always easily visible or itemized on hotel invoices.

Hotel Mistakenly Charges Hospital for Sales Tax

One of TAG’s clients, a not-for-profit health system, recently ran into issues with tax paid in error. The Residence Inn by Marriott billed sales tax to the health system. Without question, the health system paid the invoice in full, including exempt sales tax.

After identifying the issue, The Audit Group worked directly with the hotel to resolve. TAG was able to recover $9,000 in credits for the hospital for the tax billed in error.

TAG’s Tips for Reviewing Hotel Invoices

To ensure that your health care organization is receiving the proper sales tax exemptions on hotel invoices, follow TAG’s tips below.

• Ensure Accounts Payable is aware of all tax exemptions and discounts available for hotel stays and hospital functions
• Create a purchase order that itemizes negotiated charges for rooms and other services (such as banquet functions or conference) to ensure Accounts Payable is able to correctly pay the invoice
• If you are in a sales tax-exempt state, flag and review hotel invoices that itemize tax
• Do not pay an invoice until it is clear that all discounts and exemptions are included

If your health system or hospital’s Accounts Payable department is struggling to keep up with tax exemptions and invoice monitoring, it may be time for a second look. The Audit Group can work with your AP department to streamline processes and ensure your organization is not leaving money on the table. Give us a call to learn more.