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Connecticut to enforce room occupancy tax on short-term home rentals, May 2018


 Run a short-term rental in Connecticut? The state will soon start enforcing its room occupancy tax on short-term home rentals.

Connecticut’s 15 percent room occupancy tax on short-term home rentals isn’t new. In fact, Airbnb has collected and remitted it on behalf of its Connecticut hosts since June 2016. However, updated guidelines on short-term home rentals published by the Connecticut Department of Revenue Services (DRS) indicate the state may soon crack down on the enforcement of this tax.

Room occupancy tax is a sales tax imposed on stays of 30 days or less. For rental contracts of up to 90 days, including month-to-month contracts, the tax only applies to the first 30 days of occupancy. It doesn’t apply to rental contracts for a period of 90 consecutive calendar days or more.

The 15 percent tax applies to all charges associated with occupancy, including accommodations, amenities, and services (such as cleaning fees), whether separately stated or included.

Generally, the owner or operator of the home is responsible for collecting and remitting room occupancy tax — although, as noted, Airbnb manages room occupancy tax for its Connecticut hosts. Taxpayers who rent independently as well as through Airbnb or other third parties that collect and remit on their behalf must register with DRS and report any tax not reported by third parties.

DRS reminds that, in addition to room occupancy tax, owners of short-term rentals may owe Connecticut income tax on the rental income.

Enforcement

According to the DRS guidelines, PS 2017(3), “The requirements set forth in this Policy Statement shall be enforced for reservations with deposits made on and after May 1, 2018.”

This should be a wake-up call for anyone offering short-term home rentals. If you’re not already collecting and remitting Connecticut room occupancy tax, it’s time to start. Tax automation software can help. Learn more.


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.