Menlo Park, California, to enforce short-term rental tax law

The city of Menlo Park, California, will start enforcing an ordinance requiring short-term rental hosts to collect occupancy tax from their guests.

The existing law requires guests to pay the 12% tax on any accommodations that are rented for fewer than 30 days, but until now, the city has only enforced the ordinance for hotels.

Both hotels and vacation rental operators are required to register with the city tax administrator and obtain a transient occupancy registration certificate. Hosts must add the occupancy tax to guests’ bills and file regular returns to remit the tax to the city.

The City Council recently approved a measure to hire an outside company to create a database of short-term rentals operating in the city and notify hosts about the law. Enforcement against vacation rentals will begin in January of 2021.

Between 396 and 524 vacation rentals are operating in Menlo Park, with average nightly rates between $211 and $254, according to data company AirDNA. Only 12 homes and four corporate lease companies are registered with the city to collect occupancy taxes.

Short-term rental platforms including Airbnb and Vrbo have agreements with several California cities to collect lodging taxes at the time of payment on behalf of individual hosts. However, neither has this kind of agreement with Menlo Park, meaning that hosts are responsible for getting licensed and collecting taxes on their own.

MyLodgeTax can help short-term rental operators comply with Menlo Park occupancy tax compliance. For more on California lodging taxes, see our state Vacation Rental Tax Guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.