Tax compliance may not be simple for vacation rentals
Summit Daily News
The county has begun using new software to identify and collect unpaid sales and accommodations taxes from vacation rental owners, but some owners say they’d be happy to pay if they only knew how.
Complying with local municipal sales and accommodation tax and licensure requirements may not be as simple as it sounds, some owners say.
“I truly want to get into compliance,” said one vacation rental owner, who asked that his name be withheld. “It hasn’t been clear … who is trying to collect the tax. Is it the county? Is it Breckenridge? Is it the state? I’ve had a business license, but there are no instructions, rules or anything about what you do. Actually collecting and delivering the taxes to somebody, that wasn’t part of the explanation.”
Breckenridge’s collection efforts indicate he isn’t the only owner confused about the process of remitting taxes.
A 2009 town study revealed many second-home owners were renting out their properties on sites like http://www.vrbo.com, but were not paying proper taxes or licensure fees. But following the study, the town was able to collect taxes from every property owner contacted, bringing in a total of $10,000.
“I do believe a lot of people just don’t know about the requirements,” county manager Gary Martinez said. “They may be out of compliance, but I don’t think they necessarily are trying to turn their nose up to the law.”
The owner who spoke with the Summit Daily said he’d owned and been renting his unincorporated Summit County property for four years and hadn’t known he owed sales or accommodations taxes at all until he began to hear and read about town and county efforts to collect the taxes in the media.
And he wasn’t the only one. Following a recent Summit Daily story about renewed efforts by local governments to find “vacation rentals by owner” (VRBOs) and bring those owners into compliance, the Town of Breckenridge saw an increased number of calls from concerned rental owners.
“That prompted a lot of people understanding that they were not in compliance,” Breck spokeswoman Kim Dykstra-DiLallo said. “If you don’t do taxes for a living and you get into the short-term rentals, it can be confusing.”
The county recently signed on with a private vendor that uses a software program to generate leads on non-compliant rental properties. Officials then follow up with the owner with “fairly specific” information on what taxes are owed and how to remit the money.
“It’s not meant to be a ‘gotcha’ operation,” Martinez said of the program. “It’s meant to get people aware of the laws and requirements and bring them into compliance.”
But not all individuals who rent out their homes are simply ignorant of the tax requirements, county officials say.
Summit County Government sends out a form and informative brochure to all new homeowners in January explaining that if they will be renting the home out, they have to fill out a form so the proper taxes are collected.
“We rely on them to send the form back and tell us, ‘I’m going to use it as a second home or I’m going to use it as a rental property,'” County Assessor Beverly Breakstone said. “What happens is people ignore our form or, I’m sorry to say, they lie to us. They check ‘I am not renting,’ and then we find them on a VRBO site.”
Individuals who own properties available rented privately in one of the five towns – Breckenridge, Blue River, Frisco, Dillon and Silverthorne – may owe varying sales and/or accommodations taxes on the money paid for every rental of their property and may be required to have a business license. The rates of both taxes and licenses vary depending on the town. Vacation rental owners with properties located in unincorporated Summit County owe sales taxes on every rental of the property.
Every vacation rental owner, regardless of the location of the property, is also required to pay taxes to the county on the value of the furnishings inside the home, including furniture, electronics and artwork.
Owners of vacation rental properties can contact their local municipality’s clerk or finance offices for more information on how to comply with local tax and licensure laws. Private companies, like Hotspot Tax Services out of Denver, can also help individuals understand and file taxes on their short-term rentals.
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