What taxes do you collect at your Inn?

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Hi all. Marvelous forum you have here!

I'm doing some research at the moment on the taxes/fees applicable to Inns in different states and countries and I'd love to hear from anyone willing to share what they have to work with.

Specifically I'm most interested in:

  1. What taxes do you have to deal with? (City/County/State/Lodging/Occupancy/Sales/etc.)
  2. Are they percentages or flat rates?
  3. Any conditions or rules dictating which taxes are applied? E.g. If room cost is > $A, tax at X%. If room cost is > $B, tax at Y%. If number of nights is over 30, don't tax at all.
  4. Do you have any compound or 'stacked' taxes or are they all separate?
  5. Do your taxes change based on where the guest is from (e.g. out-of-state or international guests)?

Thank you for taking the time to read. I would truly appreciate any input you can give.

Have a wonderful day! smiley

Joey Camb's picture
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In the UK if you are under a certain turn over its no tax - we are too big so we have to pay 10% of turnover as tax but it covers everything ie I sell an extra breakfast, gift shop etc so it does make it easier to work out.

We also don't have to pay tax or national insurance for employees as long as they don't work more than 18 hours a week - but its finding people who want less than 16 hours a week!

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Arks's picture
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camberleyhotelharrogate@yahoo.co.uk wrote:

We also don't have to pay tax or national insurance for employees as long as they don't work more than 18 hours a week...

Yes, there are companies here who mostly hire part timers just so the staff won't qualify for company insurance coverage. A lot of people end up holding multiple part time jobs, none with benefits.

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Generic's picture
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Doesn't work like that around here at all. First of all, everyone gets health, but other things like unemployment count the hours you work and retirement counts your income. It's all balanced at the end of the year, but hiring part-time doesn't save a company anything other than "extra benefits" that they might offer, which are few and far between. Even vacation pay is 4% of your salary. So if you work 4 different jobs you get 4% on each of those salaries which works out to two weeks vacation pay.

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Arkansawyer wrote:

camberleyhotelharrogate@yahoo.co.uk wrote:

We also don't have to pay tax or national insurance for employees as long as they don't work more than 18 hours a week...

Yes, there are companies here who mostly hire part timers just so the staff won't qualify for company insurance coverage. A lot of people end up holding multiple part time jobs, none with benefits.

You don't want to open this can of worms. Trust me. (and yes this is VERY political)

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Arks's picture
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Joey Bloggs wrote:

Arkansawyer wrote:

camberleyhotelharrogate@yahoo.co.uk wrote:

We also don't have to pay tax or national insurance for employees as long as they don't work more than 18 hours a week...

Yes, there are companies here who mostly hire part timers just so the staff won't qualify for company insurance coverage. A lot of people end up holding multiple part time jobs, none with benefits.

You don't want to open this can of worms. Trust me. (and yes this is VERY political)

Oh yes, I know! That's why I just said "companies" and left it at that. No need to debate the issue.

Iris's picture
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In Michigan we have a 6% sales tax on rooms and gift shop items and a 2% Convention and Visitors Bureau assessment. Pays fro our wonderful Pure Michigan campaign.  That assessment needs to be collected in all establishments that have 10 or more rooms.  Small Inns are exempt 

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seashanty's picture
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Aleben,

Why do you ask?

 

 

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I have been reading about the success of Air BnB recently and noticed that one of the biggest complaints is the fact that the home owners are not paying the required taxes and fees associated with running such a business.

OnTheShore's picture
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AirBnB doesn't make it easy -- they have no provision for calculating any tax what-so-ever, and instruct those listing rooms/properties for rent that might be subject to tax to include the tax within your rates, blah blah blah. But in many jurisdictions, we are required to list the tax separately. It's a real kludge, and I'ld like to see some state attorney generals get together to take a crack at them....

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Generic's picture
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Around here, when found they are treated as tax evaders. Not only is the fine supposedly $700 a day, but the government can estimate their income and send them a tax bill going back 7 years for that estimate. Hard to fight when you don't want to show them proof that you were cheating and knew it.

gillumhouse's picture
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It is not just the taxes and fees - it is the hoops of inspections, insurance, health codes, fire codes, zoning codes, building codes that legitimate, legal B & Bs must navigate to open and remain open. We cannot "just open our doors" or post an ad. Pointing out missed taxes and fees is the ONLY thing that interests the governing bodies.

In NYC their answer, rather than track down the offenders, was to enact a law that would shut down the entire B & B industry (which helped hotels totally!).

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seashanty wrote:

Aleben,

Why do you ask?

 

 

Did anyone notice there was no answer given to the question asked by SS? Hmmmmmmm

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That isn't unusual...many of the 'first timers" never come back. Many don't like our answers so they just go away or lurk. That is why I am not responding any more. 

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EmptyNest wrote:

Many don't like our answers so they just go away or lurk.

The answers here are fantastic! I didn't expect there would be so many more in such a short time.

Breakfast Diva's picture
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Sorry Ice, I win! I've got just a 1% state lodging tax.

Silverspoon's picture
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Nope.  I pay 0% lodging tax.  B+B's with 3 or fewer rooms do not have to collect the 5.7% state tax or any local room tax.  Sure does help on the paperwork side of the business.  My rates are "all inclusive, with no additional tax, tip or fees".

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Ice
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Silverspoon wrote:

Nope.  I pay 0% lodging tax.  B+B's with 3 or fewer rooms do not have to collect the 5.7% state tax or any local room tax.  Sure does help on the paperwork side of the business.  My rates are "all inclusive, with no additional tax, tip or fees".

 

Here's the winner for the lowest!   cheeky

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Breakfast Diva's picture
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yes

Silverspoon's picture
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Well if people actually read the web site they would "get' that our rates beat the rates at the larger, popular inns in the area because their rates do not include all the extra taxes and fees.  But as you all know, most folks do not read.  How many visitors to our web site actually understand that they are getting a bargain when they stay here in a suite or the private ocean-view cottage?  Only the ones who actually book.  And then I get "You mean I don't have to pay a room tax????" and they think I'm cheating on my taxes.  Ah well.  

Breakfast Diva's picture
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Before they added our 1% state tax, and I didn't have to collect any, I used to have on our website after the rate "INCLUDES ALL TAXES"

It worked for the most part, but of course there were still many who didn't read and were happily surprised that the rate they saw was actually the final rate they paid.

Generic's picture
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Does this mean that I lose? The total of my taxes on the room is 18.999125%

Ice
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crying

Ice
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I won I have  the lowest 5.725!  surprise

OnTheShore's picture
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We collect state Lodging Tax, currently at 7% (but proposals to raise it to 10% are under consideration at the State legislature). No municipal or county taxes (yet).

Any merchandise we sell is subject to state Sales Tax, at 5% (again, no municipal or county taxes).

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Currently 10%

5% sales and use tax

5% transient/lodging tax

(There is a meals tax as well here, but for us I refute this each and every month since we DO NOT SELL any food, and breakfast is complimentary, but I still turn in the form because I have to. But if you BOUGHT a meal here you would pay another 5%. On a pizza, or any place you purchase food.)

Those rentals over 30 days do not pay the transient/lodging tax, and those B&B's with I think 2 rooms or less do not collect it either. 

Generic's picture
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Tourism tax on the room only. On top of the total including tourism tax, federal tax and then state/provincial tax. But on something other than the rooms, just the federal tax and state/provincial tax.

I also have to partially pay commercial property tax on my property. And of course our own person income taxes on our income.

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I appreciate your response. Interesting to read about your compound taxes. May I ask if you use software to manage your reservations, and if so, does it work perfectly with your tax setup? E.g. Can it calculate federal tax and state/provincial tax based on the 'room rate + tourism tax' instead of just on the room rate alone?

Generic's picture
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Well, we have set it up in a way that it calculates the taxes on the room. No problem with add-on items. The parking is a bit more difficult because the software handles it as a room, so we discount the price to compensate for the tourism tax.

Arks's picture
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05/22/2010

Arkansas
Taxes are on all stays, same for all people, except where indicated below

6.00% state sales tax (going to 6.50% July 1)

2.00% state tourism tax

1.25% county sales tax

1.00% city sales tax

2.00% city advertising and promotion tax (does not apply on stays over 30 days)

Iris's picture
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Arkansawyer wrote:

Arkansas
Taxes are on all stays, same for all people, except where indicated below

6.00% state sales tax (going to 6.50% July 1)

2.00% state tourism tax

1.25% county sales tax

1.00% city sales tax

2.00% city advertising and promotion tax (does not apply on stays over 30 days)

Holy smokes.  That's dizzying 

Arks's picture
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IrisoftheWayfarer wrote:

Holy smokes.  That's dizzying 

Yes, and I'm sure they're trying to come up with other ones to tack on! It always sounds like such a minor thing. Just a penny or two. But they add up!

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Wow! Five taxes must be tricky to manage. May I ask if all these taxes are calculated on just the room rate, or are some of them 'compounded' in some way? For example, are some taxes calculated based on the room rate plus the total of some of the other taxes?

Arks's picture
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Aleben wrote:

Wow! Five taxes must be tricky to manage. May I ask if all these taxes are calculated on just the room rate, or are some of them 'compounded' in some way? For example, are some taxes calculated based on the room rate plus the total of some of the other taxes?

No taxes on taxes. You just total them up (12.25% total) and tack that onto the room rate. So it's not hard at all to manage them all. I do have the software itemize them on the receipt so people people know where the 12.25% comes from.

I might add that there are "innkeepers" out there charging zero taxes by saying they're just renting out their spare bedroom and not really a business. Bogus of course, but they're doing it.

gillumhouse's picture
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West Virginia has a State Sales Tax of 6% of the sale. There is also a hotel tax of 3% to 6% depending on the location (city or county) and what they enacted as the %. I, however, am in a municipality that did not enact an ordinance to collect said hotel tax - therefore I only collect 6% sales tax. City  controls the extra tax in their City Limits. If I were out of Limits and in the County, I would be collecting the extra 6% for the County.

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Thank you. I appreciate the reply.

It sounds like your situation is a lot less complicated and more manageable than that of many other Inns.

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