OwnerRez recommends collecting and remitting taxes yourself, rather than letting the OTAs do it for you. Up until now my property manager has always handled this on my behalf, and now the OTAs. So I realize that now with my own website I have to be involved as well. I am just wondering how other homeowners handle the collection and remittance of taxes. Do you do it all yourself or is it done by multiple sources? TIA
We've been doing our own taxes for the past 3 years and no problem at all. In our jurisdictions, we two/3 taxes per property (state, hotel, and local sales). Before we used a PMS I used Quickbooks Pro desktop and ran reports at the end of each month. With our current PMS we just run a report at the end and it breaks out the taxes by jurisdiction by property. Now all I have to do is put the figures into the report format and remit payment. OR makes it a bit harder but still easier than QB Pro.
No need to use/pay for a service and/or PM> Takes me 15 minutes per month for all the properties.
@Michael D Do you have any listings on the OTAs and let them do the taxes for bookings there, or do you opt to be paid out by them and remit those taxes yourself as well?
Yep, we do recommend remitting them yourself if you can for two reasons:
a) Once you're remitting some for direct bookings, it's hardly more work to remit them all... and sometimes can be easier than trying to reconcile wrong taxes.
b) That way you have visibility and knowledge that they're calculated and submitted right and channels aren't making a mistake.
That said, if your taxing authority already has an agreement with the channel and everything is handled for you, there's no reason to do the taxes for that channel. But if (like in my area) the channels do 1 of the 2 taxes and not the other taxes, it's far easier to just do all of the taxes than to try and get them to remit their portion, you remit something else based on upping the nightly rate, and keep everything straight.
Have been doing it since I first listed on Vrbo in 2014. Vrbo collects them and passes to me and I remit both state and county. Same for Airbnb - I finally was able to set up "professional tools" which makes Airbnb collect and pass tax to me, and I remit. Same for my direct bookings. I rather NOT have any OTA meddling in my taxes since there is no proof ever that they have remitted them on my behalf and how much. It is not complex really, anyone with a spreadsheet or a dollar store calculator can do it in a few minutes a month.
Becky G - No, I don't. In our area the OTA's don't do all the taxes so I'd have to part anyway. Also, if I do it I know it's done and filed timely. I get a receipt from the tax authority each time.
From the very beginning we've used Avalara MyLodgeTax (formerly known as Hotspot tax) to handle the licenses & taxes for our properties.
It costs $20/month per property plus an initial $50 set up fee. In addition of course you must pay for each business license that is required but you would have to do that anyway.
You just report to Avalara the number of nights rented and taxable revenue at the end of each reporting period and they make sure all of the appropriate tax authorities are paid the proper amount of tax.
When just getting started with our short term rental business we were kind of overwhelmed with everything and we felt that taxes and proper licensing was absolutely one area we wanted to be sure was done right so we were happy to have Avalara handle this important aspect for us.
Do you offer any integrations or possibilities with Avalara? That would make it so nice!
At present, no, but they'd be welcome to reach out to us to discuss an integration.
An API link with Avalara would be amazing. There are some months where I've had copy/paste errors (mostly because the properties are listed in a different order on their site than in my OR tax report--I try to be so careful but it's easy to paste the wrong value or fat-finger something!) and have had to had it corrected after submission.
@Ken, they do have an API and appear to welcome integrations. Details here: https://developer.avalara.com/mylodge/
At the _very_ least, adding an option to export the OR tax report in a format that is compatible with their "upload a spreadsheet" option would be a big help. I can provide the spreadsheet template I got from them if that would help.
I'm not seeing a way in Airbnb to disable tax remittance.
I like the advice of being in control and making sure that taxes are done and filled timely and I would like to do that. According to the Airbnb Occupancy taxes doc "...is required by law to collect and remit local taxed on behalf of hosts.." and they list all the locations where they do this which includes pretty much all the US states.
so how exactly can I be in control in Airbnb case? or the answer is simply "you can't in the case of Airbnb"
Found this article, really comprehensive: https://www.ownerreservations.com/support/articles/channel-management-api-integrations-airbnb-taxes
The answer with Airbnb is "it depends"... Sometimes you can control who remits the taxes, other times Airbnb won't no matter what, and still other times Airbnb will whether you want them to or not. :-/