7 Replies Latest reply: Aug 22, 2019 10:00 AM by islandpearlchinco RSS

    No ability to collect required county tax in Virginia

    sml_va New Member

      Hi there all,

      I know there's a lot of information about local tax issues with VRBO around a couple of states, but I haven't seen a thread about Virginia.  I have a rental house in Bedford County Virginia which has a 7% transient occupancy tax for which I'm required to pay. With the changes in VRBO collecting state tax, I have lost the ability to charge this tax to our renters.  VRBO's "solution" is to have me send an additional payment request after booking to cover the 7%.  How is this appropriate?  As a renter, I would be really upset if I got an additional payment request for 7%!  At our peak season that's hundreds of dollars per stay!

       

      I have called VRBO and expressed my displeasure, to which I wasn't greeted nicely and basically was told it's my issue, deal with it.  They are doing be the favor of paying the taxes for me....a couple of issues I have with this:

       

      1- when someone requests to stay an extra night (or nights), and I send an additional payment request for the nightly amount, VRBO doesn't tack on the tax for that night....so who pays the VA tax for that?

      2 - I still have to keep my VA EIN as the county uses that number when I file their taxes.  Because I still have to keep the number active, I still have to file VA taxes, even if the amount is zero, so no saving of my time there at all.

       

      For right now, I'm not collecting the county tax on new rentals I take, and paying that 7% out of pocket.  It works for me in the short term as our high season is almost over, but that's not a solution once next summer rentals start coming in.  I haven't called the county yet to see if others have contacted them about this new challenge that their VRBO owners are facing.  I don't expect them to do anything about it, but they should have a heads up that rentals might be doing own (aka tax revenue goes down) if renters chose to go somewhere else where they don't have to deal with additional payments and the confusion that stems from that.

       

      Just curious if others in VA are feeling the pain on this topic, perhaps if we all express our concern/frustration VRBO will do something about it.

        • Re: No ability to collect required county tax in Virginia
          bonesxxx Active Contributor

          I am in VA as well (Albemarle County).  VRBO does not collect the Transient Lodging tax (thank you big hotel chains who lobbied for this) for me either.

           

          When the law was first passed (5% in my jurisdiction), I just increased my rates by 5% to cover it.  You have to file the tax regardless of the rental source so just increase your rates from here on out by 7% and call it a day.

           

          I don't think that VRBO (or any platform) are or ever will be set up to pay this tax on our behalf because it's based on gross income (less cleaning fees).  Even under the best of circumstances, VRBO only has visibility to what they collected on your behalf.  Assuming you use other platforms, you will always need to file as only you know the full monthly gross income.  It's a PIA for sure which is why I chose to raise my rates across the board by 5% and move on.  Not worth overthinking it.

          • Re: No ability to collect required county tax in Virginia
            islandpearlchinco New Member

            I just dont understand why VRBO took the option away from the homeowners to add the tax in with a percentage tab. Its great that they are collecting the state tax but we the homeowners still have to pay the local. ALL I AM ASKING FOR IS MY OPTION BACK TO IMPLEMENT A PERCENTAGE BASED FEE !!!.

             

            I also have a house in Florida- VRBO collects all my taxes here!!! I just have to physically send the local payment in, so what is the big deal in Virginia?

            I think by law if they are the entity collecting the payments they should be liable for the tax!!!

            • Re: No ability to collect required county tax in Virginia
              treeguy Contributor

              VRBO, like many 'transaction facilitators' has been caught in the whipsaw of state indignation surrounding STLs that do not collect and remit the necessary taxes - or worse collect but don't remit.  The legislatures in many states decided to pursue the facilitators (on-line booking agents) as a means to collect these taxes.  VRBO had no choice but to acquiesce. For my state, Indiana, VRBO has managed to collect the state sales tax as well as the individual county lodging taxes.  I don't understand why some states seem to be so problematic.

              What concerns me is the reported uncaring attitude VRBO has displayed in states where there seems to be some difficulty processing local tax collection.  A company with their vendors well being and relationships at heart would at a minimum explain why the situation has arisen, acknowledge that it is not the best scenario for the vendors they rely on and commit to pursuing a corrective action asap.  If the problem is with the state demands and inability to provide the information needed such should be communicated.  It would then be up to the vendors to contact their local representative and demand a change in process.

              With the recent explosion of STLs more changes and regulations are in our future.  What was a nice cottage industry became a big target when the online behemoths (Air Bnb, Expedia, Trip Advisor, etc.) saw a potential to monetize each transaction and property.

              As owners we take the risk and they reap a good portion of the bennies.  That is our new reality.

              • Re: No ability to collect required county tax in Virginia
                sugarfoots1 New Member

                Our STR is in Lancaster county where the local tax is 1% and is taken out of the 5.3% total for Virginia. When this first came out that Homeaway was collecting and paying the taxes I contacted the Virginia Treasurer's office and was told the following:

                1. Virginia is requiring Homeaway/Vrbo and others to collect the taxes and pay them directly to the state.

                2. We are required to also file form ST-9 on any rentals not going through Homeaway/VRBO (nothing new here)

                3. We are still required to file form ST-9 monthly even if we had no income; same as always.

                4. Homeaway/VRBO is the beneficiary of the "Dealer's Discount"  It's not much individually but when multiplied by the number of STR's in Virginia, could add up to a tidy sum.

                5. The liability for paying these taxes is shifted to Homeaway/VRBO on payments received through their platform.


                Next I called Homeaway and was told:

                1. We will not receive any confirmation that the taxes have been paid, but it does show up as a charge to us on the payment page.

                2. The state requires that 'all fees' be taxed including cleaning fee and pets fees. Since I don't pay our cleaning lady over $600/year I have let her know that her taxes on any income she receives from me, assuming the traveler came through Homeaway,  after July 1, 2019 have already been paid. Not sure how she proves that.

                3. When I asked to whom Homeaway was reimbursing the 'Dealer's discount', the traveler or the owner, they said they had no plans to reimburse anyone.

                 

                I'm not sure why Albemarle and Bedford Counties would have a different set-up from Lancaster, but perhaps mentioning that there is an additional County tax in your write-up (if that;s allowed) would help and then just edit the quote.

                Sorry, I know there is a lot of old news here.

                • Re: No ability to collect required county tax in Virginia
                  momovich New Member

                  I am glad to find this thread, as I have been calling and searching and emailing about this. This is certainly a step backwards!  I have been sending a separate request for the taxes to my guests on Airbnb for a couple of years. Just for the record, to address this statement, "As a renter, I would be really upset if I got an additional payment request", not one single guest has objected because I explain it very clearly in my listing, again in my House Rules, and again when I send the request. I just tell them that it is a requirement and that Air doesn't collect it so I must do so. The thing is, I was always so happy that VRBO collected it, up front, for me. This is, as I said, a step backwards, for me. Now I have to collect it for both Air and HA. When I contacted HA about it, asking, "What is this 1% city tax you say you are collecting? Who is getting it? Does that mean I only collect 7% from my guests, instead of 8%? What's the deal schlamiel (not really)? They sent me some cut and paste answer and were a little rude about it. So silly.

                  • Re: No ability to collect required county tax in Virginia
                    islandpearlchinco New Member

                    The best is yet to come, now VRBO will hold all our money until the guest arrives. I dont know what this does to everyone else's cash flow but mine has gone from bad to worse. VRBO and Yapstone will hold all of our money and collect all of the interest in their accounts! The only alternative is to pay an additional 3% to Yapstone to get the same payment disbursement we already had and who's to say how long they will honor that arrangement. My only alternative is to raise my rates. My property in Virginia will probably survive however my property 6 minutes away from Disney in Kissimmee a 5 bedroom 4 baths and a private pool house at $99.00 a night just to be competitive,  WILL NOT.

                    3 big changes have occurred in less then 12 months-

                    1. they have taken away my ability to collect my rent directly on my property - do I dare say MY property.

                    2. They have taken a way my ability to collect local taxes with a percentage base fee key for the local taxes. I think this was done so the renters wouldn't have the perception that VRBO was double taxing them. I guess it is OK that the renters think the owners are scamming then when we ask for another tax  payment. Oh and by the way,  is the additional tax payment also withheld until the guest arrives?

                    3. Now they are holding all of our rental money, in some instances up to a year.

                     

                    As a homeowner I feel like a hostage!!!