The state Fairness in Lodging Act, which became law in June, gives local governments additional enforcement authority to ensure individuals who rent out their vacation homes are appropriately remitting their state and local accommodations taxes. The Act allows local governments and the Department of Revenue to share taxpayer data to better enforce the collection and payment of state and local taxes.
Council must pass an ordinance authorizing the city to work with DOR to identify "vacation rental by owner" taxpayers who are not submitting their accommodations taxes correctly. In addition, officials must notify these taxpayers of the various applicable taxes on accommodations.
"The Fairness in Lodging Act does not represent a tax increase," explained Melissa Carter, the Municipal Association's research and legislative liaison. "Rather, it is creating an equal playing field for all rental property." Vacation rental owners who followed the law by charging their renters the appropriate taxes and paying the local business license tax were put at a disadvantage before this legislation passed.
The Municipal Association staff has created several resources for cities, including a model ordinance, a model notice of sales tax rates on accommodations and a list of instructions for cities giving them guidance on administering the Act.
For questions or more information, contact Melissa Carter at firstname.lastname@example.org.