Loading...
Loading...
Category: Legal & Regulations
By: Tony Russo
Reply by Anika Sharma:
This is more common than you think — many hosts don't realize they need to collect occupancy tax. Here's how to get into compliance: **Step 1: Determine what you owe** - Contact your city/county tax authority (usually the Finance or Revenue department) - Find out: tax rate, registration requirements, and filing frequency (monthly, quarterly, or annually) - Common tax names: Transient Occupancy Tax (TOT), Hotel/Motel Tax, Tourism Tax, Bed Tax, Lodging Tax **Step 2: Check if Airbnb already collects** - Go to airbnb.com/help/article/2509 for Airbnb's tax collection list - If Airbnb collects your local tax automatically, you're partially covered for Airbnb bookings - But: VRBO, direct bookings, and other platforms may NOT auto-collect. You're responsible. **Step 3: Register with your local tax authority** - Apply for a TOT certificate / business tax certificate - This is usually free and takes 1-2 weeks - Some jurisdictions require a separate STR permit (additional fee) **Step 4: Start collecting tax** - Add the tax to your pricing (either build it into the rate or add as a line item) - On Airbnb: Settings → Taxes → "Add a tax" for jurisdictions where Airbnb doesn't auto-collect - VRBO has a similar tax settings section **Step 5: Address the past-due tax** - Contact the tax authority and disclose your hosting history - Most jurisdictions offer a "voluntary disclosure" program with reduced penalties - Pay the back taxes + any reduced penalties - This is almost always better than getting caught, which can result in 25-100% penalty PLUS interest **Typical tax rates:** 8-15% in most US cities. Some resort towns charge 12-18%. Yes, you ARE liable for past-due tax. But voluntary disclosure shows good faith and usually results in much lower penalties than if they discover you first.
Reply by Nolan Peters:
I was in the same situation — hosted for a year without collecting city hotel tax. I voluntarily disclosed to my city and owed about $2,400 in back taxes. They waived the penalty (which would have been another $600) because I came forward voluntarily. The clerk literally said: "We appreciate hosts who come to us first. The ones we find ourselves get the full penalty." Don't wait — handle it now. The longer you wait, the more you owe.