North Carolina Taxes Rental Accommodations
- Jun 4, 2014 | Gail Cole
Recently enacted legislation subjects gross receipts derived from the rental of private residences, cottages, or similar accommodation to North Carolina state and local sales tax and any applicable local occupancy taxes. The tax applies to rentals occupied on or after June 1, 2014.
Accommodation is defined as “a hotel room, a motel room, a residence, a cottage, or a similar lodging facility for occupancy by an individual.”
Generally, the retailer is responsible for collecting and remitting sales tax to the state. However, sales tax liability may shift when accommodation rentals are booked by another party.
When a person contracts with the provider of an accommodation to market the lodging and accept payment from the consumer, it is the responsibility of that person (the facilitator) to send the payment and sales tax collected from the consumer to the retailer. Liability for sales tax is as follows:
- A facilitator that does not send the retailer the tax due on the sales price is liable for the amount of tax the facilitator fails to send. A retailer is not liable for tax due but not received from a facilitator.
- A facilitator is not liable for tax sent to a retailer but not remitted by the retailer to the Secretary.
- A rental agent (as determined by written contract) for the provider of an accommodation is considered to be the retailer and is liable for the sales tax due.
The sales tax imposed by House Bill 1050 does not apply in the following situations:
- “Rental of a private residence, cottage or similar accommodation for fewer than 15 days in a calendar year (other than those listed with a real estate broker or agent);
- An accommodation supplied for the same person for a period of 90 or more continuous days; or
- An accommodation arranged or provided to a person by a school, camp, or similar entity where a tuition or fee is charged to the person for enrollment in the school, camp, or similar entity.”