Odd Tax

Most of our taxes are VAT type of taxes, but not the hotel tax. I've been calculating it wrong... to the benefit of the government. Apparently, when I get paid by X, BK or Air (and not the customer), I don't have to remit the hotel tax. Ugh! So, now I have to change my "payment methods". Because I still have to remit the VAT taxes, because their tax is an input.

A couple of months after I opened I realized I had been wrongly paying in the sales tax I collected. I looked at the after-tax total income for the month in the ResKey report, and was paying in 12% of that, so I was also paying tax on the tax amount!
I guess there's a good reason most businesses pay an accountant, but at least I realized my mistake early on and only lost a few dollars to the tax man...I think!
This reminds me of a friend of mine who always tips at restaurants on the pre-tax total, not the total that includes sales tax. I guess the same would be true in VAT countries where it's already built in. If you tip based on the grand total, you're also tipping for the privilege of being taxed.

Arks said:

A couple of months after I opened I realized I had been wrongly paying in the sales tax I collected. I looked at the after-tax total income for the month in the ResKey report, and was paying in 12% of that, so I was also paying tax on the tax amount!
I guess there's a good reason most businesses pay an accountant, but at least I realized my mistake early on and only lost a few dollars to the tax man...I think!
This reminds me of a friend of mine who always tips at restaurants on the pre-tax total, not the total that includes sales tax. I guess the same would be true in VAT countries where it's already built in. If you tip based on the grand total, you're also tipping for the privilege of being taxed..

Click to expand...

It's not an enormous amount, because it's only when a third party pays me. I already had it with Air, but I didn't realize that the same was true with X and BK. So the amount that I'm paid by X or BK directly doesn't have to pay the hotel tax, just the other two.

Arks said:

A couple of months after I opened I realized I had been wrongly paying in the sales tax I collected. I looked at the after-tax total income for the month in the ResKey report, and was paying in 12% of that, so I was also paying tax on the tax amount!
I guess there's a good reason most businesses pay an accountant, but at least I realized my mistake early on and only lost a few dollars to the tax man...I think!
This reminds me of a friend of mine who always tips at restaurants on the pre-tax total, not the total that includes sales tax. I guess the same would be true in VAT countries where it's already built in. If you tip based on the grand total, you're also tipping for the privilege of being taxed..

Click to expand...

Beware, if you do any Discounting, Res Key is Not figuring out the tax correctly in reports. So I now take my Monthly Sales (pre-tax) and Subtract Discounts and calculate tax on my own.

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no.

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

In our state, they now require all third-party intermediaries to collect and remit the state tax (on the full amount charged to the customer, including service fees) -- AirBnb, HomeAway, VRBO, and presumably X and B, too...

OnTheShore said:

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

In our state, they now require all third-party intermediaries to collect and remit the state tax (on the full amount charged to the customer, including service fees) -- AirBnb, HomeAway, VRBO, and presumably X and B, too...
.

Click to expand...

OnTheShore said:

In our state, they now require all third-party intermediaries to collect and remit the state tax (on the full amount charged to the customer, including service fees) -- AirBnb, HomeAway, VRBO, and presumably X and B, too...

Click to expand...

Good luck getting the correct amount from Expedia. They mess around with the prices so much, adding fees, reducing your room rates, lumping taxes and fees together that no one could know if they sent all of the money or not.
And given the state doesn't get any kind of accounting as to where the money came from, they could be getting 10% of it, but are just happy they're getting that much.

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

I get confused by how Expedia does business. As the property are we not allowed to show the guest what the actual room cost is? I've been told you have to print out their confirmation form (if you need one) and that's what the guest pays. How you figure out what you have to remit for lodging tax is beyond me.
I know my brother made a reservation thru Expedia and the hotel mistakenly handed him their standard check in form which showed the room rate at about $70 less than what Expedia charged my brother per night.

Morticia said:

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

I get confused by how Expedia does business. As the property are we not allowed to show the guest what the actual room cost is? I've been told you have to print out their confirmation form (if you need one) and that's what the guest pays. How you figure out what you have to remit for lodging tax is beyond me.
I know my brother made a reservation thru Expedia and the hotel mistakenly handed him their standard check in form which showed the room rate at about $70 less than what Expedia charged my brother per night.
.

Click to expand...

We just calculate and remit sales tax on the netrate paid to us by Expedia, etc.

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

See, our other taxes are VAT type. So you only pay the difference between what you paid and what you collect.

So, if X pays you $85 on a $100 room, and the tax rate is 15%, your billed total amount is $100 and VAT of $15. But you get paid $85 and VAT of $12.75. You send to the government VAT of $2.25 and $15 is commission.

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

"I do wish I could categorize my taxable revenue as "what X pays me - the commission""
Hi everyone, long time, no post! I miss the fantastic innkeepers on this forum, but I don't miss the stress of innkeeping!
Phineas, I know your post pertained to state room taxes. I've always remitted on the full amount, too. However, what do you do for federal & state income taxes? I might be doing this all wrong, but I've always categorized the commission fees as an "advertising expense" on my taxes.

For federal taxes, what Expedia pays you for the room is the sales you have to claim on your taxes.
The commissions are a deductible business expense. You can't claim sales minus commission as your actual sales.

Morticia said:

PhineasSwann said:

In our state, Air (claims) they collect all the rooms taxes and forwards them on, so we have to break our Air sales out and include them as "nontaxable revenue."
We don't do that with X, Boo, etc. because I don't think they're collecting and paying the state its taxes. I do wish I could categorize my taxable revenue as "what X pays me - the commission") but I know the state would say no..

Click to expand...

I get confused by how Expedia does business. As the property are we not allowed to show the guest what the actual room cost is? I've been told you have to print out their confirmation form (if you need one) and that's what the guest pays. How you figure out what you have to remit for lodging tax is beyond me.
I know my brother made a reservation thru Expedia and the hotel mistakenly handed him their standard check in form which showed the room rate at about $70 less than what Expedia charged my brother per night.
.

Click to expand...

Morticia said:

I get confused by how Expedia does business. As the property are we not allowed to show the guest what the actual room cost is? I've been told you have to print out their confirmation form (if you need one) and that's what the guest pays. How you figure out what you have to remit for lodging tax is beyond me.
I know my brother made a reservation thru Expedia and the hotel mistakenly handed him their standard check in form which showed the room rate at about $70 less than what Expedia charged my brother per night.

Click to expand...

No, you are not 'allowed' to show the guest what the room would have cost if they booked direct. (This goes for all OTAs per the contract)
I have not seen a discount on my room rates on X but I also do not use any of their special advertising they keep pushing at me. What I do see is they use a sneaky tactic of deception. In the list of hotels & rates they will slash through my highest rate and put in our lowest rate. Of course once the guest clicks on to our listing it will show both rooms separately with their correct rates.
Their taxes and fees are very misleading, I agree and they try to deceive the guest into thinking the fees are from the property as they state on their site they do not have fees.

While I do not tell the guest what they would have paid, I do usually tell them that booking direct will save them $ in the future; to always check the rate via the OTA but also go directly to the accommodation's site and see what the bottom line cost would be.... proof is in black and white.