35 Replies Latest reply: Dec 2, 2019 8:16 AM by feibus RSS

    NEW MEXICO Tax question

    avrana New Member

      My short term rental is in Taos, NM.  For taxes I understand there are Occupancy and Sales Tax due.  Which one of these is "Gross Receipts Tax"? 

      I pay the Sales Tax due monthly based on gross revenue to the state one a month at a 8.5% rate.


      For taxes Homeaway instructs me to plug in by tax percentage.  I'm using the sales tax rate of  8.5% which is collected from tenants and then passed on to state.  What about Occupancy Taxes.  Are these being collected and paid by Homeaway?


      The other service collects Occupancy taxes and pays them on by behalf and the just sent me a notification that they will also collect and pay Gross Receipts tax as well after July 1st.


        • Re: NEW MEXICO Tax question
          margaret CommunityAmbassador

          If HA were collecting and remitting all or some part of your tax you should have been notified. If they are not then you will have to collect and remit all taxes that are due. The OTAS only collect and remit tax from locations that require them to do so. Some locations require ABB to collect tax but not HA/VRBO. some require HA/VRBO but not ABB, some require it of both companies and some don't require it of either. Call your tax authority or HA/VRBO CS to find out if tax is being collected and remitted for your location or if you are responsible to do it. ABB collects and remits tax for the state in my area, I am responsible for local/county. HA/VRBO does not collect and remit any tax in my location, I am responsible to handle all tax for HA/VRBO, other sites and direct bookings.

          • Re: NEW MEXICO Tax question
            ashevillelookout Senior Contributor

            You should be entering on Vrbo the whole, total amount that you are charged by your state, county and municipality for Sales and Use and Occupancy taxes, not just the state taxes.  My total tax rate as entered on Vrbo is 13%.  Vrbo applies that rate to the base rental fee, the cleaning fee, and any other fee that I charge the guest.  When I submit my monthly report to the state, it includes only the amount collected for those taxes; the remainder of collected taxes goes to my municipality In a separate report.

             

            When it comes to taxes, know what you are mandated to collect; do not rely on others (like Vrbo) to do it for you.  When I got into this business, it was my first question to my accountant.

            • Re: NEW MEXICO Tax question
              ha-moderator-michael HomeAway Employee

              Hello avrana - We do suggest that you contact your local municipalities (city, county, state) to learn more about your tax responsibilities.  HomeAway does not currently automatically collect and remit taxes for New Mexico.  We will start doing so for New Mexico State, County, and Municipality Gross Tax Receipts on July 1st.  You should have received an email notifying you of that upcoming change.  Any tax percentage you currently have established in your Rates settings means your guest is paying you the funds, and you are responsible for remitting and reporting.  More information on New Mexico Gross Receipts can be found here.

               

              Thank you,

              Michael

              HomeAway Community Moderator

                • Re: NEW MEXICO Tax question
                  avrana New Member

                  I have been paying the Gross receipts at 8.5% but not the lodging.  We do have the required permit and pay that annual fee.  I have not received an email from Homeaway saying they will start to collect from guests and pay the Gross receipts and lodging tax on my behalf. 

                  • Re: NEW MEXICO Tax question
                    casitacresta Contributor

                    Sorry, but you're only collecting GRT and not any of the Lodging Taxes required by counties and municipalities. There is no way of adding a tax rate once you have started this as you have just done in New Mexico on July 1. The tax rate which I had, is no longer there. And, btw, the tax rate I had was correct at 7.125% and not the 16.375% that your rep told me was going to be collected.

                    • Re: NEW MEXICO Tax question
                      casitacresta Contributor

                      How do I get someone to deal with the fact that HA/VRBO is collecting the WRONG tax? It seems as if they are just applying a blanket rate across the state or picking one rate when there are many, many rates all depending on location. The CS reps response to me was, "That's the rate NM told us and that's what we're going to do." Now, would you like to see how many tax rates there are in New Mexico? Please take a look.

                      d07efd8c-bb7f-4c28-9f97-020dc07b18b2?response-content-disposition=filename%3D%22July+-+December+Gross+Receipts+Tax+Rate+Schedule.pdf%22&response-content-type=application%2Fpdf&AWSAccessKeyId=AKIAJBI25DHBYGD7I7TA&Signature=%2BvNHc%2BgfMh1VNONl2gSVp1TcNr0%3D&Expires=1564691760

                        • Re: NEW MEXICO Tax question
                          ha-moderator-michael HomeAway Employee

                          Hi casitacresta -  I apologize for all the confusion.  There is a lot of complexity to the New Mexico tax requirements.  It is important to note that on the document you provided that breaks down the Gross Receipts Tax (GRT) there is more than one Edgewood in the state.  Upon first glance you immediately see an Edgewood listed with 7.8750% tax, but that is for Bernalillo County, not Santa Fe County.  If you scroll down that document, you will see the correct county for your rental - Santa Fe County, Edgewood with the tax of 8.1875%.  The 8.1875% is what matches what we show to be collecting under the Rates section of your dashboard.

                           

                          Now, another thing that is causing confusion is that you may be adding all the percentages up on this table to get the sum of 16.375%, but doing that is the incorrect way to understand what is being taxed and is not the percentage we are charging your guests.  We are providing the rates for each type of taxable amount for each jurisdiction, but the rate is the same for each type of payment for each of your jurisdictions.  Therefore, if you add 5.125 + 1.5 + 1.5625 you get 8.1875%.  This sum is what we are collecting and remitting and does match the correct Edgewood, Santa Fe listed on the GRT document.

                           

                          This fulfills our requirement to collect and remit state,county & municipal GRT.  State = New Mexico, County = Santa Fe, and Edgewood = municipal.

                           

                          We do not collect local accommodations tax. If applicable to a listing, this particular tax is the responsibility of the owner. Owners may request a separate payment from the traveler to cover this tax.

                           

                          I hope this helps to dissect the taxing. I am sorry for any frustration around the additional tax collection you may have to perform for tax that is not GRT, but I do not have another solution to provide at this time.  I did want you to understand what we are collecting and submitting as a baseline.  Please let me know if you have additional questions.

                           

                          Thanks,

                          Michael

                          HomeAway Community Moderator

                            • Re: NEW MEXICO Tax question
                              casitacresta Contributor

                              AND if you scroll to the end of the Santa Fe section you will find "Remainder of County, location code, 01-001. AND THAT'S WHERE I AM. It is an unincorporated portion or Edgewood so we are not Edgewood proper. I would send you my quarterly tax filing except there is no way to do so securely on this forum. It shows my location code as 01-001 and a tax rate of 7.125%. AND, you do not address the fact that I cannot add a tax rate so YOU can collect the additional 4% that I must pay to Santa Fe County for Lodging Tax.

                               

                              All HA has to do is add a tax field, "Additonal tax required". That cannot be that hard. I'm seeing this problem all over the place.

                               

                              AND, I didn't add the rates, YOUR CS rep did and told me that was what guests were going to be charged. I told her she was wrong but she would have none of it.

                                • Re: NEW MEXICO Tax question
                                  ha-moderator-michael HomeAway Employee

                                  Hello casitacresta,

                                   

                                  Thank you for providing additional points of clarification.  Some of my confusion came from the information you added to your listing description that contains info around your thoughts on how much tax we may be collecting on your behalf. 

                                   

                                  Now that I understand that there may be an issue on how your listing is being taxed related to your municipal jurisdiction - I can have the matter investigated further.  Please look-out for an email from our support team requesting a scan of that quarterly tax filing document.  You are welcome to black-out digitally any information that you deem sensitive.  You can securely attach it to your reply of that support inquiry and we can then have the issue investigated further. 

                                   

                                  I did state in my original reply that we do not collect local accommodation tax.  We recommend that you request any additional taxes by creating an additional payment request.  I do not have another solution to provide at this time. 

                                   

                                  Thank you,

                                  Michael

                                  HomeAway Community Moderator

                                    • Re: NEW MEXICO Tax question
                                      casitacresta Contributor

                                      They asked for quarterly returns which I sent on Fri 8/2 as well as a NM tax map pinpointing our location that shows the area code and tax rate. I've heard nothing AND they have charged two new bookings tax of 9%!!!!

                                       

                                      Obviously, I've not had a word since!

                                        • Re: NEW MEXICO Tax question
                                          fredej00 New Member

                                          We are having the same exact issues in VA now that Vrbo/HA are collecting and remitting State taxes July 2019.  We as owners no longer have a way through the website to collect the taxes correctly or according to the law.  None of the CS suggestions will work correctly or legally.  I also sent copies of our county tax documents and have heard nothing back from CS.

                                        • Re: NEW MEXICO Tax question
                                          casitacynthiasantafe Contributor

                                          Michael--

                                           

                                          You write: "I did state in my original reply that we do not collect local accommodation tax.  We recommend that you request any additional taxes by creating an additional payment request.  I do not have another solution to provide at this time."

                                           

                                          BUT--HomeAway/VRBO calls the tax they are collecting "Lodging Tax" on the quote given to the traveller. Yes, the platform is collecting Gross Receipts Tax. But yes, they misrepresent that and call it "Lodging Tax." The figures and text below are from a booking made to my place on August 24. Please note that HomeAway/VRBO calls the taxes "Lodging taxes we remit." It is a violation of New Mexico tax law to not correctly name a tax. And how do you expect us to bill travellers separately for the Lodger's Tax (as it is called in Santa Fe), when they see a line item for "Lodging Taxes" on their quote?

                                           

                                          6 nights

                                           

                                          $1,570.00

                                           

                                          Booking amount

                                           

                                          $1,570.00

                                           

                                          Refundable damage deposit

                                           

                                          $200.00

                                           

                                          Lodging taxes we remit

                                           

                                          $145.13

                                           

                                          Traveler service fee

                                           

                                          $150.00

                                           

                                          Total traveler payment

                                           

                                          $2,065.13

                                            • Re: NEW MEXICO Tax question
                                              casitacresta Contributor

                                              Hi Casita Cynthia,

                                              I don't think there will be any umbrella fixes until more hosts get up in arms about the way the platforms are handling the complexity of New Mexico taxes. I can't believe there's only a few of us here complaining when there must be hundreds of short-term rentals in NM. And how many are being hit with the wrong tax rate?. According to an article from Avalara, there are more regs coming January 2020. Beginning then, all vacation rentals must collect Occupancy/Lodging tax for their locale in addition to the Gross Receipts Tax that the platforms started collecting July 1.

                                              We decided against adding another charge to guests by absorbing some of the Santa Fe County Lodging Tax ourselves and adding a few dollars on to our daily rate. Our guests will pay 55% of the Occupancy Tax, and we will pay 45%.

                                              A shout out to Michael, he seems to be the one that got our tax rate corrected.

                                                • Re: NEW MEXICO Tax question
                                                  casitacynthiasantafe Contributor

                                                  Hi Casita Cresta--

                                                   

                                                  Thanks for the information. I would be very happy indeed if all platforms started collecting the Lodger's Tax (again, in the case of HomeAway/VRBO). I am happy to fill out the monthly reporting forms and send in the checks, but I am not happy with that line being removed from my traveller invoices.

                                                   

                                                  I decided to pay the 7% tax out of my own pocket. On July 1, I was already booked through mid-September, so my first bookings under the new system start this month. When I file my September Lodger's Tax report I will be paying tax on half of the September rentals out of my own pocket, and I am not happy about it.

                                                   

                                                  Like you, I did not want to bill the travellers for an additional tax that does not show up on their quote. The loss in trust was not worth it to me. (I don't want my renters feeling about me the way I feel about HomeAway/VRBO under Expedia!)

                                                   

                                                  I too, wonder about other owners in NM--are they contacting HomeAway, their local government tax offices, the Short Term Rental office? Have you had any luck talking with local offices in New Mexico? I've had extensive conversations with the Santa Fe Tourism office and they are not happy about this situation and are talking with the City Attorney and NM Taxation and Revenue. The Lodger's Tax issue should be under the purview of the City of Santa Fe Short Term Rental Office, which is part of Land Use, but I do not think they are on top of this situation. 

                                                    • Re: NEW MEXICO Tax question
                                                      casitacresta Contributor

                                                      We started renting our 2/2 casita just in time for Balloon Fiesta 2018. Before we even listed with the platforms I went to our local town hall to do whatever needed to be done. I was told to register with state for payment of GRT and to pay Edgewood 3% Occupancy/Lodging tax monthly. If we were doing a B&B, we would have to register as such with Edgewood with lots of other regulations, inspections, etc. We don't, so no need. Registering with NM T & R, showed me we were liable for 7.125% GRT. Filed quarterly and paid ever since,

                                                       

                                                      When the platforms started collecting the wrong tax rate, I checked again with town government. They said, oops! Because we are in an unincorporated section of town, we should pay Santa Fe County 4% and nothing to Town of Edgewood and they would refund everything we had paid them. I then filed and paid nine months of late payments, with interest, to SFC Clerk's office. I asked for the $900 in penalty to be waived or abated. SFC sent receipts for the nine months but have not said a word about the penalties. Perhaps they're waiting to make sure I file my monthlies.

                                                       

                                                      I had been approached by third-party Avalara, who offered to do an analysis and tell us what we should be paying in taxes. They said, 7.125% to NM for GRT and 4% to SFC for Occupancy/Lodging Tax which verified my research. Avalara is offering full tax collection payment service which I don't really see how they can do since platforms are collecting the actual funds.

                                                       

                                                      If you had bookings in July and August, weren't you set up for VRBO to be collecting tax? If, so, you won't be paying out of pocket, the taxes will be remitted to you with rent payment.

                                                        • Re: NEW MEXICO Tax question
                                                          casitacynthiasantafe Contributor

                                                          Yes, the bookings that I had in place for July & August, and parts of Sept., Oct., Nov., and Dec., whether direct bookings with me or pre-July 1 bookings through VRBO/HomeAway, all had the correct taxes added to the quote and collected from the traveller. In September, I see my first post-July 1 VRBO/HomeAway bookings, on which I will pay the 7% City of Santa Fe Lodger's Tax out of my pocket. Not happy about that at all--it is a significant financial hit.

                                                            • Re: NEW MEXICO Tax question
                                                              casitacresta Contributor

                                                              For what it's worth, the platform that can not be named, has notified me they are submitting an override. Hopefully that means they will be entering the correct tax rate for our locale. I checked and it's not done yet but there was mention of it being a busy time. This does nothing to address the "other" local taxes. It really should be a simple enough thing for them to add a "local" tax field under other charges.

                                                               

                                                              I realize how lucky we are in not having to maximize rentals. We're not trying to make a living but only interested in covering the basic costs on the casita, insurance, taxes, utilities and maintenance. We did that with the first seven rentals leaving the casita available for friends.

                                                               

                                                              This is a difficult transition that the platforms have made even more difficult with their ineptitude. My only suggestion for future rentals is to do something along the lines of what we've done. Split that tax you can't collect automatically any longer. Raise your daily rate enough so you're paying a bit and the guest pays the balance. I think the only other option is to notify guests when a booking inquiry comes in that there is an additional 7% tax they must pay on check-in. The latter is not a great option, it's a pretty hefty addition, especially after VRBO fees. And, if you're on instant booking (we are not), not possible.

                                                               

                                                              Then, there is always the possibility of permanent tenants. The drama involved in that, is why we're doing this!

                                                               

                                                              Good luck!

                                                                • Re: NEW MEXICO Tax question
                                                                  margaret CommunityAmbassador

                                                                  I am confused by you comment. You wrote "For what it's worth, the platform that can not be named, has notified me they are submitting an override. Hopefully that means they will be entering the correct tax rate for our locale." Do you mean ABB or VRBO? What do you mean when you say "override?"

                                                                    • Re: NEW MEXICO Tax question
                                                                      casitacresta Contributor

                                                                      VRBO once deleted the name Airbnb from a message or posting so I never pass up the opportunity to razz them for their silliness. "I'll teach them to be less expensive competition," I'll delete their name!

                                                                       

                                                                      As to "override" it's their term so I can only guess as to their meaning. And my guess is, both platforms have applied a blanket (mostly incorrect) rate to either the entire state of New Mexico or to large sections. So to fix my tax rate from 9.25% to the correct one of 7.125%, they have to override that blanket rate.

                                                                       

                                                                      Another stupid item in this mess; I cannot even "see" what rate they are charging. I have to calculate what they charge to see what the percentage is.

                                                                       

                                                                      I cannot decide if this is just incompetence or sheer stupidity.

                                              • Re: NEW MEXICO Tax question
                                                casitacresta Contributor

                                                Beware the complex world of New Mexico GRT!

                                                GRT is the sales tax of NM. It varies by location and the rental platforms, including VRBO, appear unable or unwilling to fix the tax mess they have created. The tax collection situation for vacation rentals (Airbnb & VRBO) here in NM changed as of July 1. The Platforms are supposed to be collecting and paying the appropriate GRT to the state. The rate varies by location across the state from 5.125 to 8.6875%. The rate for my location (unincorporated Edgewood, Santa Fe County) is 7.125%. VRBO (rep) has said they will be charging guests 16.375% and will not explain anything further. Airbnb has collected 9.24375% from two July guests and neither platform has any idea about the various location differences.

                                                It appears they are just going to collect a bunch of money from unsuspecting guests and throw a bucket of money to New Mexico with no reconciliation or accounting.

                                                There can also be a local, county or town, Lodging Tax. Santa Fe County has a 4% rate if you are not in certain areas, So, hosts must charge guests whatever other taxes we are liable for. In my case, it will make total taxes paid by guests of anywhere from 13.24375% to 20.375% when it should be only 11.125%. This is outrageous and a lot of NM hosts are going to lose bookings because of such high taxes and, hosts are going to have some very rude surprises when they find out they have not paid the local taxes they should have paid.

                                                So far, I have concentrated my "discussion" with the other platform and they keep escalating the ticket to "a colleague better able to assist". I will be moving on to VRBO with a phone call because there is NO help in help!

                                                  • Re: NEW MEXICO Tax question
                                                    casitacresta Contributor

                                                    In addition, once the platform starts collecting state mandated taxes, there is no (visible) way of adding another tax rate, county or town. I have to notify booking requests that there is an additional 4% tax that I must collect from guests when they check in.

                                                  • Re: NEW MEXICO Tax question
                                                    casitacresta Contributor

                                                    If you haven't used it, NM has an excellent map and you can drill down to your exact location and see what your geographic locator code is, it's a six-character code with five numerals and a dash between the second and third numeral. That, and your quarterly/monthly GRT report tax rate should match. Then, it depends if you are in Taos city or county. But you are responsible for anything other than the state mandated GRT. And the GRT is sales tax.

                                                     

                                                    BTW, I don't believe it was the rental platforms that decided they were going to collect, it was the state. However, the platforms definitely need to get it together and get it right. It's not their fault NM tax code is so convoluted but by collecting taxes in your name they have created a fiduciary relationship and are responsible for getting it right!

                                                    • Re: NEW MEXICO Tax question
                                                      casitacresta Contributor

                                                      Sales Tax is Gross Receipts Tax and the platforms are ONLY collecting Gross Receipts Tax. Occupancy Tax varies by locale, at least in New Mexico. There may be an Occupancy or Lodging tax for county and or town. It is up to you to find out if and what. The platforms will be of NO help. They cannot even collect the correct GRT amount for your location. If you check the chart I posted at 2:29 today, you should be able to find your correct tax and it should match your monthly rate that you are reporting. I am going to bet it will not match what HA/Vrbo collects from guests. You will have to notify guests that there is an additional Occupancy/Lodging Tax and collect it yourself because once the platform starts collecting ANY tax for the state, the ability to enter a tax rate is lost.

                                                      New Mexico hosts really have to get together on this and badger the hell out of HA, and any other platform they're using, to fix this mess. Tell your guests if they are being overcharged on taxes.

                                                      • Re: NEW MEXICO Tax question
                                                        fredej00 New Member

                                                        We are having the exact same issues in VA...

                                                        • Re: NEW MEXICO Tax question
                                                          casitacresta Contributor

                                                          VRBO has finally changed our tax to the correct rate. A fellow named Michael seemed to have shepherded it through their bureaucracy. No specific address for him, just the regular support-cs@vrbo.com. Whole process took about three weeks and nothing happened for the first week and a half until Michael got on it. Then it was done in less than a week and a half. They are refunding the overages to guests that were overcharged. Now, the fight has begun with A*****.

                                                          All I can suggest is don't let up on them. If they don't fix this early, you will have problems down the line.

                                                            • Re: NEW MEXICO Tax question
                                                              casitacresta Contributor

                                                              Since platforms "act" as if the taxes they are collecting are the only taxes that matter, both platforms have removed any option to add another tax rate. In NM, we have a Santa Fe County lodging tax. We are dealing with this by raising our daily rate a couple of dollars and therefore "splitting" the tax with the guest. Only other solution would be to tell the guest--before booking-- that there will be an additional 4% tax they must pay directly to host on check-in.

                                                            • Re: NEW MEXICO Tax question
                                                              avrana New Member

                                                              I started this thread back in the summer when we got the word from Homeaway that they would be paying the tax.  I received this letter from Town of Taos.  Looks like I owe the 5% Occupancy Tax to them for bookings made after July 1, 2019.  It wasn't clear then the difference btwn Gross Receipts Tax (8.5% in Taos that I had been paying to NMT&R) and the Lodging Tax so I took the wait and see approach in order to not pay twice.

                                                               

                                                              So to be clear, HA is paying the 8.5% to State of NM but not the 5% to Taos?  If I pay 5% out of pocket to Taos through their reporting will I be OK?

                                                               

                                                              Taos Letter - 1 (1).jpg

                                                                • Re: NEW MEXICO Tax question
                                                                  casitacynthiasantafe Contributor

                                                                  Avrana--

                                                                   

                                                                  I'm in Santa Fe, and I am paying the City of Santa Fe Lodging Tax directly to the city out of my own pocket. As you can see from my earlier posts on this thread, HA is collecting the State of New Mexico Gross Receipts Tax only, but illegally calling it "Lodging Taxes" on the traveller's quote. So, no wonder you are confused.

                                                                   

                                                                  I would recommend paying the outstanding Lodger's Tax to Taos, AND asking Mr. Richard Bellis to pursue requiring that HA collect and remit the Lodging Tax. They have been maddeningly unresponsive to owners' requests that the local tax line be restored, allowing us to bill travellers for these local taxes. Owners from other states have suggested that we pressure our local governments to pass legislation requiring HA to collect and remit these taxes.

                                                                   

                                                                  I share your frustration! HA's failure to add a local tax line is costing me hundreds of dollars per month.

                                                                   

                                                                  Good luck to you in Taos.

                                                                    • Re: NEW MEXICO Tax question
                                                                      avrana New Member

                                                                      Thanks Cynthia,  Do you rent your place on the other service as well?

                                                                        • Re: NEW MEXICO Tax question
                                                                          casitacynthiasantafe Contributor

                                                                          No, Avrana, I only list on HA/Vrbo. Fortunately I have a lot of repeat business and referrals from within my condo complex who book with me directly, and I can invoice all of those renters with the correct tax. I also have longstanding summer renters who rent for 4-8 weeks, and rentals 30 days or longer are not subject to the City of Santa Fe Lodger's Tax. I keep thinking that I should explore listing elsewhere, as HA/Vrbo gets worse and worse from an owner's perspective, but I haven't done it yet. On the to-do list.

                                                                      • Re: NEW MEXICO Tax question
                                                                        feibus Senior Contributor

                                                                        Be glad they're not trying to collect penalties and interest or trying to audit you.

                                                                         

                                                                        If you want to collect it from guests: The first custom "house rule" for your listing as well as a message near the top of your listing description should say something about "Vrbo does not automatically collect the 5% sales/occupancy tax for the town of Taos as part of your booking transaction, so we will send you an additional payment request for that amount with the last reservation payment request."  Something like that so you can collect the 5%.  Make sure any other messaging to the guest also includes that information.