News that the Princeton Borough budget was impacted when the state overpaid the municipality its share of hotel tax revenue have raised questions about whether Plainsboro was gypped.
Township Administrator Bob Sheehan said that Plainsboro officials had been monitoring the revenue, including the fairly new source of revenue coming from the hotels in the township. “We were trying to get a comfort level of how the revenue was going to flow to us,” Sheehan said. “We had some questions that we raised to the State Division of Taxation,” which collects and distributes the hotel tax revenue, Sheehan said.
Sheehan said in a letter that Plainsboro officials met in the fall of 2007 with representatives from the state, who found that in fact, that “tax revenue was not being properly distributed due to confusion over the Princeton address and ZIP code,” and that Plainsboro had not been receiving the correct amount of hotel tax revenue.
“The matter was corrected immediately, and Plainsboro received a considerable back payment to rectify the problem,” Sheehan said. Sheehan said that Plainsboro received about $400,”000 in back payment.
There were two reasons for the mistake. “One is they were giving revenues that we due us to other communities, and second, there was confusion at the time of the procedure for monitoring hotels when they changed ownership,” and the hotels were not registering properly for the tax purposes, Sheehan explained.
“We got a back payment, and we were made whole,” Sheehan says. “It’s certainly become an important part of our revenue picture, and we keep an eye on it. It’s been okay over the last year.”
One resident, Lewis L. Fox, was among those who had questioned whether Plainsboro was receiving the correct amount of revenue. “The state’s overpaying Princeton Borough for its share of hotel tax means that another municipality has been underpaid,” he stated in a letter to the News. “I presume that the underpaid town is Plainsboro. Why didn’t PLainsboro auditors discover the shortage? How many millions of dollars does the state owe Plainsboro, including accrued interest, and what is Plainsboro going to do about collecting it?”
