I dunno, that's an iffy one. You have to, of course, count the deposit as income (which will be income taxed), but since you collected the taxes in the name of sales and lodging, I think technically you could get into trouble for collecting taxes and then not paying what you collected. The likelyhood of it ever being questioned is pretty slim. Either they have to go back to the payee or you have to send the taxes in, would be my conservative interpretation. I suppose you could weigh it as the 11% taxes (or whatever the % is) get wiped out and then become an 11% service charge....which of course you would also have to declare as income. Plus if you charge a service charge, that means you performed a service, in which case the service charge is subject to sales tax because you exchanged a goods or
service.
It's a mess. Sorry...I know that was of no help

.
swirt said:
I dunno, that's an iffy one. You have to, of course, count the deposit as income (which will be income taxed), but since you collected the taxes in the name of sales and lodging, I think technically you could get into trouble for collecting taxes and then not paying what you collected. The likelyhood of it ever being questioned is pretty slim. Either they have to go back to the payee or you have to send the taxes in, would be my conservative interpretation. I suppose you could weigh it as the 11% taxes (or whatever the % is) get wiped out and then become an 11% service charge....which of course you would also have to declare as income. Plus if you charge a service charge, that means you performed a service, in which case the service charge is subject to sales tax because you exchanged a goods or
service.
It's a mess. Sorry...I know that was of no help
Actually, it's a help to know it's not just me, and that you see it like me.
And a help to see everyone else's response too.... it really is a tough call after all.
I collect 3% in bed tax (for the CVB).
I collect $0.37 per person per night for "food tax" which is more properly called "Use and Sales Tax." Even though my food is complimentary, if they eat food on my premises I have to charge tax, but only on the actual cost of the food, not the [nonexistent] mark up. So we (somewhat arbitrarily) chose $0.37 to charge (6.75% of $5.50).
And, naturally, the monies get paid to two different taxing entities.
To my way of thinking, they didn't stay here so there is no lodging that occurred (no 3%) and they certainly didn't eat here so there was no food to tax ($0.37 x 3 persons). So to me it's a cancellation fee that I would claim on my income tax but which would not be subject to either bed or food tax.
OTOH, the guy who showed up with another person at breakast this morning didn't pay the extra $0.37, which I guess will come out of my pocket....
I guess I'll call the county and ask them about the bed tax. I think the state will be OK with me on this one.
Thanks to all for your input!
=)
Kk.