16 Replies Latest reply: Apr 17, 2019 2:29 PM by aadonf RSS

    Florida local tax

    harrytammie Contributor

      Any Florida owners out there? VRBO is now collecting and paying on our behalf only the local taxes. There now is no setting or collection of the state tax. WE have to go back after an instant booking and tell the traveler they owe another 7%? What's the best way to collect this?

       

      Harry

        • Re: Florida local tax
          floridarob Active Contributor

          Hi Harry,

           

          I can offer some help, but I'm not sure it is the complete picture. I don't know about HomeAway collecting and remitting taxes, but I do know about Florida sales/accommodation taxes, and can offer what I would do to handle this. I'm hoping my suggestions will be a conversation starter and any other knowledgeable owners will chime in with their input to complete the picture.

           

          I am assuming here that you are registered for and collecting and remitting both state and county sales taxes. Now HomeAway will be collecting some of those taxes and remitting them 'on your behalf'.

           

          Regarding your question about what the traveller sees when making a booking, my suggestion would be to indicate the total tax percentage you must charge based on which county you are in, so the traveller sees the correct and total amount of tax that you would be charging, and they should be paying for their booking.

           

          Now, we are going to go into some areas that some may feel is a complication for their ownership and rental business, but it really shouldn't be. In my opinion, every owner should have a complete management and payment acceptance process in place for their property, completely separate from HomeAway, (or AirBnB or TripAdvisor, or whatever.) The owner is the business owner/manager, and the one responsible to the authorities for properly collecting and remitting tax, and the owner needs to have their own means of collecting payments and processing reservations. When they receive a booking through HomeAway, or from any other source, that booking should be 'processed' or recorded through their own system, just like all of the bookings that they may receive from other sources. In this scenario, HomeAway just becomes another booking source and payment processor that the vacation rental owner uses. I am not suggesting that HomeAway bookings should be taken and/or processed 'offsite' at all, only that HomeAway should be recognized for what it is, one source of bookings and payment processing, and the successful owner needs multiples of these. All guests found through HomeAway should be booked through HomeAway, and this is true of other sites as well (TripAdvisor guests should book through TripAdvisor, etc.), in order to keep a successful and happy relationship with all of these sites.

           

          So, for the sake of a simple example and explanation, we will ignore HomeAway's service fee which is generally not taxed at all (so doesn't affect any of this), and let's say that your combined taxes total 15%; 8% to the state, and 7% to the county.  The booking is worth $100. You state in your listing that taxes are 15%, so as far as the guest is concerned, they are going to be paying a total of $115.00  They see and understand the correct amount they will be paying right from the beginning. The guest makes their payment to you through HomeAway, of $115.00. Now HomeAway has committed that they will be collecting and remitting the county taxes 'on your behalf', so they will take the $115.00 and withhold from it the 7% county tax (which they will then send to the county) and they will send you the balance of $108.00.

           

          When you are completing your own personal sales tax remittance forms, there is a spot on both the county and the state forms for 'adjustments' which will reduce the tax you should be remitting. In my own county of Polk County, there is a specific field on the tax remittance form for this because AirBnB withholds the sales tax amount from bookings processed on their site and remits it directly to Polk County. So in our fictitious example, you would complete your sales tax form for the county, exactly as you did before, except that you would enter into the 'adjustment' field, or whatever other field the county may provide for this purpose, the taxes withheld and submitted by the booking site. So if our example booking was the only booking you had that month, you would report sales of $100, and county taxes of $7.00, from which you would deduct or make an adjustment for the $7.00 kept and remitted by HomeAway. Deducting the $7.00 paid by HomeAway from the $7.00 you are reporting, would leave you with a balance of $0 to submit.

           

          So this is the underlying concept to keep in mind: You total up your own sales each month, and report the total sales, and the total taxes that would be due on your total sales, and then you deduct whatever the total amount of taxes kept and remitted by HomeAway (and any other listing site you may be on doing the same thing) and pay the balance directly yourself.

           

          Again, I think that every owner MUST have their own means of managing their own bookings, and collecting payments and remitting their own taxes, no matter what any site they may be on does. Aside from the legal requirement that YOU are fully responsible for the taxes due on your own bookings, NOT HomeAway or any other site, in order to properly run your business, this is something you MUST be able to do. Let's look at a more complete example, and it will become apparent why this should be the case, and how the whole tax remittance thing shakes out.

           

          Let's say that you have your $100 booking from our example above.  Now, after the booking has been made and paid for through HomeAway, and you have your money from HomeAway (minus the county tax, which HomeAway will remit), the guest says; "I would like to add Optional Pool Heating to my booking" which you charge an additional $100 for. You say to the guest "No problem, that will be $115.00 ($100 + tax)" and the guest pays you directly. You don't bother with creating an additional payment request through HomeAway (which you actually could do if you wanted to) but instead you just take the payment directly because it is less complicated than running it through HomeAway's system. (HomeAway has already collected their service fee when the guest made their first payment, so HomeAway isn't missing out on anything if you take the payment directly.)

           

          And, for the sake of our example, let's say that you have a returning guest this month who also books for $100 + tax, but does so directly with you, not through a listing site, simply because they can and the guest already knows and trusts you and wants to deal directly with you.

           

          And you accept another booking from AirBnB for $100 plus tax, and AirBnB also has an agreement to collect and remit taxes on your behalf with your county.

           

          So here is what this whole scenario looks like:

           

          $100.00 + $8.00 State tax + $7.00 County Tax for Original HomeAway Booking

          $100.00 + $8.00 State tax + $7.00 County Tax for Optional Pool Heating added to Original HomeAway Booking

          $100.00 + $8.00 State tax + $7.00 County Tax for Repeat Booking you took directly

          $100.00 + $8.00 State tax + $7.00 County Tax for AirBnB Booking

           

          Totals to report on your Tax Forms:

          $400.00 + $32.00 State tax + $28.00 County Tax Totals for the Month

          Less amounts already remitted on your behalf by the listing sites:

          $00.00 State Tax + $14.00 County Tax for Original HomeAway Booking & AirBnB Booking paid directly by the sites

          Equals amounts to be Remitted by you:

          $32.00 State tax + $14.00 County Tax for Sales collected and remitted by you.

           

          In a nut shell, you report all sales that you have, and deduct from the amount you have to remit, any taxes remitted by the listing sites, whatever they happen to be.

           

          Again, it would be my expectation that you should put in your listing the total sales tax percentage you have to charge on your rentals, so the guest knows what the total amount they are paying is and have no surprises. HomeAway will only be applying to your sales a deduction based on the percentage of the one tax they are collecting and remitting, so will in a sense ignore the other tax, leaving it in your hands to remit.

           

          I trust that this all makes sense to you.  Other owners who have practical experience in this area hopefully have some good advice to add in case I have missed anything.

            • Re: Florida local tax
              aadonf New Member

              Hi Floridarob

               

               

              I'm an owner from Polk county too.

               

              I didn't know how to file my returns.

              I was completely lost and, no help or answers from the  DOR.

               

              Your post was very helpful  to fill the Polk county Tourism Tax.

               

              Could you help me with the Florida Departement of revenue return?

               

              In the DOR return what line do you use to adjust the tax?

               

              Thank you for your help!

               

              Regards

               

              Jean-Michel

                • Re: Florida local tax
                  feibus Senior Contributor

                  You only report the sales tax you collected for Florida to the state DOR.  For taxes collected by HA, you just leave the revenue and tax off the report entirely.

                   

                  So, yes, the amount of revenue you report to Polk will be different from the revenue reported to Florida.  Note that they're looking for "taxable revenue"... because HA collected tax on it, it's no longer taxable revenue to Florida.

                   

                  Florida told anyone who was collecting revenue through HA and ABB and none outside of that that they could entirely drop their Florida sales tax account.

              • Re: Florida local tax
                greggt Senior Contributor

                Is there still a line for Tax in calculating the total rent on the locations in Florida or do you either have to collect the additional tax outside the system or add it to the rental amount?

                  • Re: Florida local tax
                    harrytammie Contributor

                    After a ridiculous number of phone calls to vrbo and many incorrect answers, VRBO IS NOT charging state tax to the guest and remitting to us. WE have to go back and request additional payment from the guest or absorb it.

                    There is no setting for taxes anymore where we can get the state tax collected thru their system. Someone told me yesterday that in 3-4 months there will be a fix to set our uncollected tax as we did before they changed the tax collecting and remitting system.

                    One would expect this sort of problem to be addressed BEFORE the changed tax collecting system would be instituted. This booking platform in general is not a new concept, however there seems to be a multitude of rookie problems, and an even worse system for getting help and corrections to their mistakes.

                    SO, after about a month we know the what and why of a new problem, but communication is no better and neither is the problem repair.

                      • Re: Florida local tax
                        greggt Senior Contributor

                        Oh Geez!! What a mess!! Certainly glad they are not doing this is Bay County!

                        For something so basic I really wonder why they can't get this right. All it takes is leaving the tax line in the rent calculations.

                        • Re: Florida local tax
                          hill5185 CommunityAmbassador

                          homeaway_community_manager engaged and offered the HA explanation (for now) they know it's not optimal and will be working to address owner concerns. I believe this is your thread and discussion.

                           

                          HomeAway Tax Questions

                          • Re: Florida local tax
                            floridarob Active Contributor

                            OMG!!

                             

                            I just read your other thread, and realized that they have 'killed' the feature of adding tax to the prices shown on a listing in those counties where they are collecting the tax!?!  I'm sorry I misunderstood... kind of negates most of what I wrote up above.

                             

                            1) You can't provide the total tax amount because they have eliminated being able to specify and add taxes to your listing info.

                            2) You can't 'build the state tax in' to your posted prices because then HA will ADD the county tax to not only the rental charges, but the state tax component as well (taxing the tax), which further inflates already artificially inflated prices.

                             

                            All you really can do is state at the top of your description "Note: All rentals are subject to both State and County sales taxes. HomeAway will charge you directly for County taxes, and we will send you a separate invoice (sounds better than "payment request") for 6% of your total rental charges to cover mandatory State taxes. We apologize for any inconvenience, however we can not be responsible for the inadequacies of third party listing site software."

                             

                            If guests complain about having to pay more at a later date, you simply tell them the truth. "It is unfortunate that there is no way to show you what your total rental charges with all applicable taxes will be prior to booking on HomeAway sites. This was a change that HomeAway made and we have no alternative until they fix their software. Your understanding is appreciated."

                             

                            I suspect that you will find guests to be surprisingly sympathetic about the issue.

                              • Re: Florida local tax
                                greggt Senior Contributor

                                The other option would be to raise you rent number by 6% but then you will pay a Service Charge on that inflated number....

                                • Re: Florida local tax
                                  feibus Senior Contributor

                                  On ABB, they collect Florida state tax on top of your rental charges.  Only way to make it work for counties where they don't collect is to include the tax in your rental fees and back them out when you go to report the sales tax numbers to the county.  In fact, if you're in a state where ABB doesn't collect anything, you have to add the full tax into your rental rate as well.  It is what it is.

                                   

                                  So if you charge $100/night and your county wants you to collect 6% tax, your rate needs to be 106 and when you report it to the county, you'll report $100 in gross sales and $6 in taxes collected. You don't have to collect the state part of the tax or even worry about it for bookings through ABB.

                                   

                                  This appears to be the same thing.

                                  • Re: Florida local tax
                                    ycart1222 New Member

                                    Not only is vrbo collecting and remitting FL taxes they are charging us the credit card transaction fee for this separate from the credit card transaction fee we pay when someone uses their credit card to book.

                              • Re: Florida local tax
                                ycart1222 New Member

                                just checking are you talking about this?

                                1. In the direct deposit breakdown, you'll see a second CC fee for a few dollars, that's the CC fee on the Florida tax part, which you're expected to pay regardless of who remits the taxes.  Call that one a wash (you paid it before they collected the tax for you, you're paying it now, but it's broken out more obviously now for the state portion).


                                I never paid a cc remittance fee for taxes because my rate was all inclusive so this is another charge I am having to eat.


                                Thank you for responding!

                                  • Re: Florida local tax
                                    feibus Senior Contributor

                                    You would be incorrect in your calculations.  Even if you were doing an "all inclusive" and not separating out the tax, you still paid a CC fee on the money you eventually remitted as tax.  That CC fee has not changed just because you're not collecting and remitting for the state.