Sales and Lodging Tax Basics

As a Host on iStopOver, you may be required to collect sales and lodging taxes on your rentals. The following discussion summarizes the general requirements.

As a iStopOver Host, you may be required to charge and collect taxes on all short term rentals. In some cases short term rentals are defined as rental periods up to six months. Many of these taxes are specific to lodging and are a significant tax revenue source in resort communities. These taxes are established by state, county and city governments and may be referred to as sales, lodging, hotel, room, occupancy, or transient accommodations taxes.

These taxes are charged on the total revenue (rent) you collect you’re your renters, including cleaning fees, cancellation fees, gratuities, etc. There are no deductions to sales taxes, it is a tax on revenue, not on net income.

Non-compliance may result in significant penalties and interest charged by tax authorities on taxes not collected.

As a vacation rental property owner you’re required follow these steps to be in compliance with these requirements:

Register your property

The registration process varies by location. In some states you are only required to register with the state and in other locations you are required to register with the state, county and city. It is important to check with each governmental authority.

Collect sales tax from renters.

The tax you are required to collect is set by state, county and city governments. In some areas there is one rate for the entire state, in others, the taxes charged varies by the county and city. Generally, these taxes range from 5% to 15% tax on the total rent charges, typically averaging around 10%.

File tax returns monthly and/or quarterly

Once you collect the tax from your renters, you are required to file the appropriate tax returns to the state, county or city (potentially all three based on the location of your property). These returns are typically due monthly or quarterly.

Make tax payments to city, state, and county tax authorities.

Along with the tax return, payment must be remitted each month or quarter to the appropriate state, county and/or city. Due dates for these tax returns and payment is typically the 15th, 20th or 30th of the following month.

HotSpot Tax Compliance Service

Due to the complexity, importance and administrative burden of these tax requirements www.istopover.com has partnered with HotSpot Tax Services. HotSpot offers a low cost, effective, guaranteed solution to handle all of these compliance issues for you. Find more info or register at www.hotspottax.com.

How the HotSpot Program Works

1. Complete HotSpot's online registration and subscribe to the service.
2. Once you are registered, HotSpot will contact you to ensure you are registered with the proper taxing authorities. Depending on your property's location and your specific needs, this process may take several weeks to complete.
3. HotSpot will contact you when your account setup is complete and will inform you of the taxes you should charge your renters.
4. When it comes time to report your rental activity, HotSpot will send you a reminder email containing instructions on reporting your revenue. After you enter your rental activity for the period, the system will automatically calculate your sales tax liabilities, generate an ACH payment to deduct the funds from your account, and send you an email receipt with the details.
5. HotSpot then handles remitting your return(s) and payment to the proper authorities.
6. The cost for HotSpot Tax Services averages about $100 to $120 a year, depending on your location.