5 Replies Latest reply: Oct 21, 2012 10:20 PM by sfvacationhut RSS

    Hotel Tax (TOT) and Tourism Fee (TID) in San Francisco

    sfvacationhut Community All-Star

      This discussion is for us to discuss questions and answers, information discovered, etc, about the the hotel / lodging tax, also known as the Transient Occupancy Tax (TOT) (currently set at 14%), and the Tourism Improvement District (TID) Fees (currently either 1% or 2%, depending on your geographic location) in San Francisco.

       

      Many people question whether we need to pay these so-called "hotel taxes" when we are operating vacation rentals or guest rooms; we are not hotels in the traditional sense of the word.

       

      Also, the San Francisco Treasurer's web site is very unclear about this stuff.  So it makes it difficult to find answers.

       

      Another problem is that there appears to be no enforcement at all of the city's regulations regarding the hotel tax.  So .. if there's no enforcement, what's the point of paying the tax?  Would you drive under the speed limit if there was never a chance of getting a speeding ticket?  Heck, would you even pay your income tax if you thought nobody in the government really cared?

       

      Does the City's lack of enforcement create an unfair business environment for those who pay the hotel tax and those who do not?  Can the City of San Francisco be held legally responsible for creating this unfair business environment? 

       

      There are all questions we can discuss here.  Feel free to add your own issues or other ideas to the discussion.

        • Hotel Tax (TOT) and Tourism Fee (TID) in San Francisco
          sfvacationhut Community All-Star

          Regarding the hotel tax (TOT) and TID fees ... from what I have seen on the listings, it seems that many vacation home owners in San Francisco are not charging these taxes and fees to their guests and are not remitting the taxes and fees to the City.

           

          In my neighborhood, we started a network of vacation home owners where we get together and talk about issues.  One thing I have heard, from my neighbors, is that people figure that they don't need to pay the hotel tax because they never registered as a Business.  The problem is, it's the other way around.   You need to pay hotel tax if accepting stays of 29 days or less; therefore, in order to pay it, you must register as a business.

           

          That's per regulations.  Now what about per "real life" ?  I have talked with one member of the City Council as well as four different people in the Tax Assessor's Office.  The people in the Tax Assessor's office say that yes, you are required to pay these fees, and if you don't pay them you will get all sorts of penalties assessed against you.  BUT: they do not have any staff in the hotel tax payment section of the Tax Assessor's office assigned to enforcement. This is what they actually told me over the phone.  (The guys from City Council said it was an important issue and had one of his staffers send me a couple e-mail's, but they never answered my question.)

           

          So!  We have people who have been operating their vacation rental for 10 years or so ... and have never paid hotel tax, and no one from the City has ever cared.  Will the City ever start to care?  We don't know.

           

          Also, could it be that our attorney has interpreted the regulations incorrectly, and that the Tax Assesors Office gave me the wrong information also, and that in fact, we really ARE NOT required to pay hotel tax, per regulation?

           

          This is a place for us to discuss these kinds of questions.

            • Hotel Tax (TOT) and Tourism Fee (TID) in San Francisco
              sfvacationhut Community All-Star

              If you're one of the many vacation rental owners who are not paying hotel tax, don't worry ... I personally am not trying to do any kind of witch hunt here.  Anyway, it's very easy to see from your web site and listing, whether you are sending in the hotel tax or not.  It's no secret.  Personally, I blame the City for the lack of information on this issue ... the regulations are ABSOLUTELY NOT clearly explained on the City of San Francisco web site.  It's not your fault. And besides, we have no idea if the City will ever start enforcing the hotel tax, so it may be that you will never have to pay it. 

               

              If you want to be anonymous on this forum, why not pick an anonymous username.  This way, you can post whatever you want, and no one will be able to connect you or your vacation rental to the username.  In other words, DON'T PICK a name that is the same as your web site URL, the way I have done! 

               

              I know it's a bummer to hear about the hotel tax, which means less money coming in for us, since all the guests are looking for a bargain and price point.  But I believe it's good for all of us to know what the regulations actually are. This way, if the City ever does start enforcing the hotel tax, none of us will be caught off guard or surprised.

            • Re: Hotel Tax (TOT) and Tourism Fee (TID) in San Francisco
              New Member

              So, I am unclear about the hotel tax thing as it relates to the taxes we pay (and losses we deduct) when our unit is vacant? If I understand my accountant correctly, it makes sense to stay above board, pay the tax, and then deduct losses from our other income. Since we are just starting out, our unit will be vacant much of the time so it makes sense to take a loss and get a break on other taxes. Is anyone doing this? Is it cost effective?

                • Re: Hotel Tax (TOT) and Tourism Fee (TID) in San Francisco
                  sfvacationhut Community All-Star

                  sfrental wrote:

                   

                  So, I am unclear about the hotel tax thing as it relates to the taxes we pay (and losses we deduct) when our unit is vacant? If I understand my accountant correctly, it makes sense to stay above board, pay the tax, and then deduct losses from our other income. Since we are just starting out, our unit will be vacant much of the time so it makes sense to take a loss and get a break on other taxes. Is anyone doing this? Is it cost effective?

                   

                  Note that the hotel tax / TID fees are a percentage (14% + 1% or 2%) of the occupancy fees / rent, and the hotel tax / TID fees are PAID BY THE GUESTS WHO ARE STAYING AT YOUR PLACE.

                   

                  So .... whenever your apartment is unoccupied, I assume there is no one paying occupancy fees / rent to stay there ... and that means you won't be collecting any hotel taxes / TID fees for the nights when the apartment is unoccupied. 

                   

                  For example ..

                   

                  Last year (2011) we had about 1 month that was unoccupied (January), so there was very little hotel income received, and therefore very little hotel tax / tid fees paid for that month.  Then we had 9 months booked solid with short-term (less than 30 days) rentals, and our guests paid about $4500 in hotel taxes/ tid fees.  Then we had 2 more months which were booked solid with a 30+ day long-term rental (actually 4 months extending into 2012), so there were no hotel tax / tid fees collected on those last 2 months.  In the end, we collected about $4500 in taxes / TID fees from our guests, for 9 months of short-term rentals in 2011, and we submitted these amounts to the City of S.F. Treasurer's Office.

                   

                  (Imagine if we had booked it with short-term rentals for 12 months ... it would have been $6000 extra income for the city !!!  This is income the city never expected to receive.  The city should be totally loving the short-term / vaction rental business, I do say !!!  )

                   

                  So on Schedule E - Rental Expenses, there is a line for taxes, and we had something like $8500 on that line.

                  Because it was about $4000 for the property taxes and $4500 for the hotel tax / TID fees ... all of these were taxes that we paid for the vacation rental property during 2011.

                   

                  sfrental, hope this info helps you !