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Need help with short-term rental lodging taxes? Learn how to manage them in 5 steps.

  • Apr 9, 2024 | Jennifer Sokolowsky

April showers may bring May flowers, but April also brings taxes to mind. Meeting the federal income tax filing deadline is critical for short-term rental (STR) operators and property managers. But that’s not the only tax you need to be concerned about. Lodging taxes are also crucial for anyone running a vacation rental property — and they generally need to be filed multiple times a year, not just once.

This difference in filing deadlines is just one example of how federal income taxes are different from lodging taxes. In fact, there is no nationwide federal lodging tax; all lodging taxes are local in nature, created and administered by local governments including cities, counties, states, and special taxing authorities. And every local government’s rules and processes for lodging tax compliance may be different from their neighboring jurisdictions’ rules and regulations.

Another key difference is that, while income taxes are paid out of the pocket of the tax filer, lodging taxes are actually paid by the guest booking the accommodation. However, operators are responsible for collecting these taxes when the guest pays the bill — and getting tax revenues to the right tax authority on time.

This can all make lodging tax compliance a complicated proposition. Still, it’s an important part of running a lodging business. While there was a time when STRs could sometimes fly under the radar, local governments have realized how much tax revenue can be generated by STRs and they’re taking measures to maximize that funding source.

In some cases, local governments are passing laws to make sure STRs are subject to the same lodging taxes as other accommodations businesses by levying new taxes or specifying that existing taxes apply to STRs. 

Local governments are also working to make sure vacation rental businesses are accounted for, follow the rules, and pay their taxes. For one thing, local governments are getting much better at getting information on which STR properties are operating in their jurisdictions. Some are requiring STR marketplaces such as Airbnb and Vrbo disclose this information directly or prohibiting them from listing properties that aren’t legally registered

Governments are also emphasizing enforcement by hiring staff to focus on STR governance as well as utilizing technology that helps them get data they need to crack down on rule-breakers. In some cases, authorities are increasing penalties for violations of short-term rental rules.

While STR marketplaces do take care of lodging tax collection for STR hosts and property managers in some situations and jurisdictions, there are plenty of exceptions — so you can’t just automatically expect Airbnb or Vrbo to always fulfill your tax obligations for you. In the majority of cases, the responsibility for lodging tax compliance rests solely with the operator.

Our mission is to simplify tax compliance, and we’re here to help. Our guide, 5 steps to managing lodging tax compliance, takes you through what you need to know and do to keep up with lodging tax obligations. The guide covers lodging tax essentials, includes a comprehensive checklist, and offers resources for further guidance.

Ready to conquer lodging tax compliance, step by step? Get our guide now.

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Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.
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