Local tax registration is a common tax compliance issue among small businesses in the hospitality industry – and there are several issues.
Many rental property owners and Airbnb hosts are under the misconception that:
- if they have not registered as a business entity, such as an S corporation or LLC, they do not have to register with their local tax authority to receive a license;
- there are various local requirements around collecting and remitting sales and occupancy taxes; and/or
- if they are renting their primary or secondary home, or only renting occasionally, they are exempt from licensing requirements.
While there are some exceptions, more times than not, anyone renting property on a short-term basis needs to be registered, licensed and tax compliant. Ensure your clients avoid costly fines by ensuring they comply with local tax registration requirements for rentals and hotels.
Understanding Definitions of Lodging and Hotels
Depending where the rental property is and what type of rental, your client will need the appropriate business license, occupational license or vacation (or nightly) rental permit. Depending on the type of rental they operate – hotel, vacation or occasional – many states require a rental owner to register for a license or a permit.
About Judy Vorndran
Judy Vorndran leads the state and local tax practice (SALT) at TaxOps, developing efficient SALT management functions and advising businesses in all aspects of state and local tax compliance. She is a recognized leader in SALT solutions and is focused on providing the highest level of responsiveness