Vacation Rental (Short-Term) Insurance Policy Providers

How to Send in the Hotel Tax
in SF (if you decide to do it)
Rachel Donovan
[email protected]
Presentation sponsored by
 1.
Pay for your Hotel License
 2. Tell your guests you are collecting
the HOTEL TAX / TID / MED fees; show
the itemized amounts
 3. Submit monthly payments online and
quarterly statements to the CITY.
 4. Keep receipts for all your SF Hotel
Tax / TID / MED payments
1. Get Your “Hotel License”
Registration Form (1) (how I did it)
 Ownership,
check: Sole Proprietor
 Ownership NAME: Just your name
 Federal EIN or SSN … I simply put in
my own Social Security Number.
 Start Date in S.F. … Must be no earlier
than 15 days prior to your submittal! SF
Business Tax & Regulations Code, Article 12, Section 856 (f)
Registration Form (2) (how I did it)
 Business
Mailing Address (for your
mail) … self-explanatory 
 Business Location: Here you list all the
addresses of S.F. apartments where
you host short-term rentals
 BUSINESS NAME (DBA, Doing Business As
or FBN, Fictitious Business Name) (NOT
necessary! I left it blank; if you do want to register a
name, you must file with SF County Clerk)
Registration Form (3) (how I did it)
Primary Business Activity … brief description
in your own words; e.g., “apartment and
room rentals”
 Note: THE CITY will assign class “03” for
“Hotels, Apartments, etc”
 Residential / Commercial Lessors Only …
NOT FOR MOST OF US … this is for …
owners of: 4+ unit residential building, or 2 or
more rental properties in S.F., or a
commercial building
Business Registration Info
How much does it cost?
 Annual
Fee (for most of us) = $25.00 + $1
If fee is $25, it’s NOT
How do you pay?
“All new business registration forms must be
accompanied by a check , cash (in person) or
money order payment. Please make the
check payable to San Francisco Tax
Collector and submit the fees and
registration form in person or via mail, to the
Office of the Treasurer & Tax Collector, City
Hall - Room 140, 1 Dr. Carlton B. Goodlett
Place, San Francisco, CA 94102-4638.”
 BUT: Your business license renewals can be
paid online (yay!).
 DEADLINE to submit payment for renewals:
MAY 31 each year! Otherwise: $50 late penalty. 
2. Collect Hotel Taxes & Fees
Things to consider
 Which Zone is your property in (Zone 1
or Zone 2)?
 What are the current hotel tax rates?
 What does the hotel tax apply to?
 How do you charge the hotel tax to your
Zone 2
Zone 1
S.F. ZONE 1 vs. ZONE 2
 S.F.
 On
or EAST of Van Ness Ave
 On or EAST of South Van Ness Ave
 On or NORTH of 16th St from South Van
Ness to the Bay, including EAST of Van Ness Ave as
if it continued north to the Bay, and north of 16th St. as if it
continued east to the Bay
 S.F.
 West
of S. Van Ness Ave or Van Ness Ave
 South of 16th Street
1 Rates
= Transient Occupancy Tax = 14%
 TID = Tourism Improvement District Fee, 2%
 MED = Moscone Expansion District
1.25% from Jan. 1, 2014 to end of MED
2 Rates
= 14%
 TID = 1%
 MED = 0.3125%
Zone 1 TOTAL = 17.25%
Zone 2 TOTAL= 15.3125%
What does the hotel tax apply to?
 Total
fees paid by guest for booking the
room, including (examples)
 occupancy
 cleaning fee
 parking fees*
 storage fees
 no-show (cancellation) fees
 online booking fee
* If you have a parking space rented by others not staying at
your building, consult: SF Business and Tax Regulations
Code, Article 9. Section 609. Parking Space Occupancy
Tax Simplification for Residential Properties.
Advertise Hotel Tax on Airbnb
Itemize the Tax Amounts for
your Guests before Booking
Itemize the Tax Amounts for
your Guests before Booking
Newsflash: Airbnb now displays service
fee to hosts before booking!
the 
offer” screen
 In
But it’s still impossible
for us to calculate hotel
tax on the Airbnb
service fees. Because,
if we increase the price
to include a tax amount
on the service fee,
we’ll have to re-enter
the total price, and now
the service fee will be
higher; creates an
infinite loop!
If we can’t accurately calculate hotel
taxes on Airbnb’s service fees, what can
we do?
I have included the language (in previous slide)
saying that I think it’s Airbnb’s responsibility to
submit the hotel taxes for their “Airbnb service fee”
portion. Makes sense to me, since that’s money we
have nothing to do with. Why should we submit
taxes for Airbnb, on THEIR revenues???
In truth, I think Airbnb should be in charge of
submitting hotel taxes for the whole amount (not just
the service fee), but since they are not doing that, I
am submitting hotel taxes for the portion that I
receive. I hope this will cover my legal obligation in
the event of an audit by the City of San Francisco.
Collecting Fees not thru Airbnb
 Ways
to advertise
 Ways
---> Historically, hosts
had full control over
choice of payment
method & sharing
contact information.
to get paid
Collecting Fees not thru Airbnb
VRBO, HomeAway, and Flipkey have been
subscription listing services. There is (or was) NO
SERVICE FEE charged to the guest upon booking;
only a yearly/monthly advertising fee paid by host.
All 3 services now offer online payment platforms
where guests can pay with credit card (minus
transaction fee) or electronic check (for free, U.S.
bank accounts only)
Now Flipkey has changed to a service-fee model for
new hosts (like Airbnb). HomeAway and VRBO are
moving that way, too.
But! At least they do allow you to enter a % hotel tax,
itemized on the guest receipt!
VRBO / HomeAway / FlipKey
Collecting Fees not thru Airbnb
Note: Online payment platforms (flipkey,
homeaway, vrbo) … only show total % hotel
tax, so you must itemize hotel taxes
separately. Telling the guest they are paying a total of
15.3125% tax is not acceptable per the code. They have a right
to know the amounts and %’s for TOT, TID, and MED. I send
the itemized amounts to the guest in a separate e-mail.
Per the new SF Tax Collector regulation 2012-1, Flipkey, VRBO,
and HomeAway can be considered “an operator” because of
their online payment platforms. And, with their new “service fee
models,” now they (or someone) is responsible for submitting
hotel tax on the added-on service fees, too.
Before, when VRBO/HA/FK did not deal with payments AT ALL,
it was clear that the individual host was the operator. Now, with
these online payment platforms and regulation 2012-1,
VRBO/HA/FK may be on the hook for hotel taxes like Airbnb.
Taking Reservations Directly
So far this is the only way I know of to process the
Hotel Tax properly, because there won’t be any
weird service fees added on, and you don’t have to
use someone else’s online payment system.
Just write up an invoice itemizing the correct
amounts, and then ask for payment, in whatever form
you choose (check, cash, Paypal, bitcoin, credit card,
This is possible for VRBO/HA/FK subscription users
because you’re not required to use their proprietary
online booking system. It’s merely an optional tool
you can use if you want. If you’re using FK’s payper-booking service, unfortunately you do not have
the option to take reservations directly.
How can you take Credit Card
payments directly?
Create your own merchant credit card account
Paypros transaction fee is 2.5%, and your guest
pays no service fees! Or you can use PayPal.
3. Send Pre-Payments & File
QTRLY Hotel Tax Statements
 Hotel
Tax (TOT, TID, MED) statements
are due every quarter (that’s every 3
months) to the City of SF Treasurer
(due April 30 for Q1, July 31 for Q2, etc)
 Prepayments (TOT only) due monthly.
 Monthly prepayments and quarterly
statements are reasonably easy to
submit online.
3. Send Pre-Payments & File
QTRLY Hotel Tax Statements
4. Keep Receipts / Records
 Save
receipts for hotel tax / business
license renewals, etc … these are for
DEDUCTIONS against your rental
income (Form 1099-MISC).
 Keep an accurate record of all guest
names, rent amount & dates of stay, in
case of an audit (by IRS or City of SF)
Need help with hotel tax? Try
Hot Spot Tax Services
Ian from uses Hot Spot Tax
Services to calculate the hotel tax in Airbnb.
Hot Spot Tax has been around forever and is the one
touted by HomeAway / VRBO. They have a very
good reputation.
I haven’t used them personally because with only 1
property, it’s not that much hassle to submit the hotel
taxes myself.
More on Hot Spot Tax
Ian said that Hot Spot Tax “back-calculates” the amounts from
the Airbnb rate. This means the hotel tax is deducted from the
total rate advertised on Airbnb.
Technically the hotel tax should be added ON TOP OF the
advertised or agreed-upon nightly amount, just like sales tax.
But for right now, I’m guessing this method would be good
enough. Hopefully the City would agree that this is better than
not submitting the taxes at all.
Just be aware that if the SF Treasurer ever decided to audit Hot
Spot Tax, and if they truly are back-calculating, it’s possible SF
Treasurer could charge Hot Spot Tax with underreporting.
The GOOD NEWS is, Hot Spot Tax assumes all responsibility
for errors (according to their web site), so apparently those
underreporting charges and fees would be borne by Hot Spot
Tax Services.
What Can Airbnb Do?
If Airbnb would contract with a business like Hot Spot Tax
services, it would be easy for Airbnb to submit hotel taxes all
across the U.S. (so the hosts wouldn’t have to do any of this
paperwork) … and Hot Spot would assume all legal
responsibility for any errors, etc. Seems like a good insurance
plan on the part of Airbnb! Many cities, counties, towns, and
states have hotel tax rules which Airbnb and most of its hosts
are ignoring. Any number of these municipalities have every
right to go after Airbnb asking for back taxes and penalties.
Could be a very expensive situation for Airbnb.
If Airbnb refuses to do that, they could at least agree not to tack
the airbnb service fee on top of amounts destined to go to hotel
taxes. Unfortunately, then the hosts would still be responsible
for calculating the hotel tax on the Airbnb service fee and
submitting the amounts to the City, which I think is very unfair!!!
But at least this would make the full hotel tax calculation
possible, without going into an infinite loop.
So now you know how, but why
(or why not) pay hotel tax?
Planning Code Violations: Paying the hotel tax would
not “tip anyone off” for planning code violations as
the Treasurer does not work with the Planning Dept.
in this way. The Planning Dept will issue “cease and desist” letters based
on citizen complaints. The fact that you were or were not paying hotel tax
should have no bearing at all on their decision. Many “cease and desist” letters
have been issued, but so far I have not heard of any that were issued for hosts
who were paying hotel tax. But it shouldn’t make any difference.
Buildings with 4 or more units: with the recent update
to the Vacation Rental ban, citizen groups (not just people living in
the building) can file complaints about illegal short-term rentals. Thus, you may
not want to publicly declare your activity. On the flip side, perhaps the City
would be more likely to accept your operations, if you were already in the
system as a hotel tax payer with a hotel license.
For landlord/tenant situations, paying the TOT would
be evidence of short-term rentals; if in violation of your lease,
you probably don’t want this evidence to be available.
Hotel Tax is nothing new …
Vacation rentals and short-term / shared housing
hosts have been paying the hotel / lodging tax all
across the USA for decades. It’s the norm in the
When we pretend we are exempt as Airbnb hosts, we
don’t have much of a leg to stand on.
The only difference between Airbnb and older advertising web sites is
that Airbnb not only advertises, they do our bookkeeping and bill
collection, bank transactions, too! That’s great! So much easier for us!
But it doesn’t change anything about the service we are providing.
Knowing that our bookkeeper is not submitting the
taxes which are owed, are we not liable as well?
Stats on Hotel Tax Funds
Approx $300 million total in 2012
 Year 2012: $200 million to City of S.F. General Fund
(largest single contributor to the city’s general fund !)
 $37 million to SF Grants for the Arts (theater, dance,
music, cultural programs)
 TID goes to stable and adequate funding for the San
Francisco Travel Association (funded 65% of their
$26.2 million 2012-13 operating budget)
 (web site out of date; typical!)
 MED funds capital improvements, upgrades and
expansion analysis for Moscone Center.
Hotel Tax Allocation, 2012/13
Fiscal Year (prior to implementation of MED)
Good P.R. for short-term
For those short-term rentals that are not violating a
rental lease, or the vacation rental ban, or a
condominium agreement … (is there anyone left?)
Paying the hotel tax is a great way to
show that we are “good citizens.”
When we pay the hotel tax, we cannot
be accused of “stealing tax revenue.” It
is clear to everyone that we are in fact
giving back to the community.
SF Planning Codes
ENFORCEMENT NOTIFICATION (example, issued January 10, 2012, to short-term rental in single family home, Pac Heights)
Planning Code Section 176. Code Violation: 209.2(d): Other Housing (Short-Term Vacation Rental Use for Transient Guests)
Up to $250 Each Day of Violation (but so far I haven’t found the code applying to residences with kitchens) (Are the violations valid?)
Unfortunately the Planning Code web site is difficult to navigate. It has frames so I can’t paste specific links to code.
SF Admin Code Chapter 41A
“Vacation Rental Ban” -- Read FULL TEXT HERE
GO TO: "Administrative Code" and then (in the left-hand section) click on "More" and then "More" again to get down to Chapter 41A.
Depending on how you read it, either it only applies to buildings with 4 or more units (if read with an implied comma), or, as written,
without the comma, it could possibly apply to any room meant to be occupied.
SF Hotel Tax
Tax Collection Regulation 2012-1
Business Tax Regulation Code Article 7 “TAX ON TRANSIENT OCCUPANCY OF HOTEL ROOMS.”
Sections 501-515.2 Go to
Vacation Rental Tax FAQ
Basic Hotel Tax Info
Coming Clean about Hotel Tax
Sales Tax 101 (30-minute interview with CPA from Hot Spot Tax Services)
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