Blue Dragon Properties, the owner of the Albert Lea Inn, was charged in Freeborn County District Court last week with seven taxation violations, after allegedly failing to pay lodging taxes required by city ordinance.

An audit says the company now owes $7,600 to the city.

According to court papers, at the beginning of January of 1996 the city of Albert Lea imposed a tax of 3 percent on the rent charged by hotel and motel operators for providing lodging to any person.

“The tax is to be stated and charged separately and to be collected by the operator from the lodger,” the documents state.

An operator is classified as who provides lodging or an employee or agent of that person. A person “is defined as any individual, corporation, partnership, association, estate, receiver, trustee, executor, administrator, assignee, syndicate or any other combination or individuals,” the papers state.

According to Albert Lea City Code 58-30, the city’s finance director can examine the books and records of any operator to verify the accuracy of any return made or the find out what the tax should be if no return was made.

On Sept. 23, 2008, Finance Director Rhonda Moen did just that as she began an audit of the record of Albert Lea Inn, court papers state. Albert Lea Inn is at 2301 E. Main St. in Albert Lea. The audit covered December 2007 through August of 2008.

Documents state Moen concluded there had been an “honest mistake” for the month of December 2007, but that the lodging tax had not been paid for the months of February, May, July and August of 2008. In March, the lodging tax return reported $10,000 less income than the actual lodging revenue received by the hotel, the papers state; in April the return reported $5,000 less revenue than actual lodging revenue received; and in June the report showed about $6,200 less revenue than actual lodging revenue received.

At the end of the audit it concluded that almost $6,100 in lodging tax from the Albert Lea Inn was due plus interest and penalties for a total of about $7,600 as of Oct. 14, 2008, documents state. Moen sent a letter to the hotel that day to show the findings.

It stated, “Any tax due computed on the basis of the examination shall be paid to the city within 10 days after receipt of this notice,” according to court papers. The letter also noted there were misdemeanor criminal penalties for making incomplete, false or fraudulent returns.

As of Jan. 2, balances had not been paid for the balances from February through August 2008.

Albert Lea Police Department Detective Deb Flatness interviewed the Albert Lea Inn manager and the head of Blue Dragon Properties.

The head of Blue Dragon Properties, 33-year-old Tonya Navarro, told the detective there should be no discrepancy.

“She stated that she was aware of the problem, and that (the manager) took care of bills and accounts receivable,” the papers stated.

She “admitted that the lodging tax was due, but the money was not there to pay it.”

Each of the taxation violation charges carries with it a maximum penalty of 90 days in jail and a $1,000 fine.

The charges came out just a few weeks after Albert Lea City Council was required to revoke the on-sale liquor license for Blue Dragon Properties. The city received notice of license revocation from the state Department of Revenue for failure to pay state sales tax. The revocation occurred on Jan. 2.

The state did not give the council the option of whether to revoke it, just whether to do it right away or to wait a week and a half until Jan. 2. The council voted to revoke it on Jan. 2 if the state did not receive the full payment of the delinquent tax money by that time.

At the council meeting where this action was taken, Blue Dragon Properties owner Tonya Navarro said she was able to get the $14,000 in funds that day that were needed to pay off the sales tax debt.

Albert Lea City Manager Victoria Simonsen said as of Thursday the city has not received any notification from the state that the sales tax issue has been resolved.

Thus, the on-sale liquor license is still revoked, and the police are checking on the establishment regularly, she said.