County focusing on tourist-tax compliance

 

Tourism is trending upward in unincorporated Tulare County though the demand is problematic for some Three Rivers innkeepers new to the local lodging scene. More tourists translate to more TOT (transit occupancy tax) revenue, and in Three Rivers where the majority of these tourists want to stay, the spike in business is being fueled by an increase in visitors to Sequoia National Park. Upwards of 60 percent of the 2015 tax revenue collected in unincorporated Tulare County came from Three Rivers. 

But to pay the 10 percent “bed tax,” or transient occupancy tax, the property owner must be officially on the county tax rolls. Herein lies the problem, according to Rita Woodard, Tulare County tax collector, who updated the Tulare County Planning Commission on Wednesday, Jan. 27, as to what her department is doing to bring lodging properties into compliance.

“If you haven’t received a letter from our office, it’s just a matter of time,” Woodard said. “If you are advertising your property on the Internet, we will find you eventually.”

Rita said that there are currently 123 properties in Tulare County paying the TOT and they are building files on 203 other potentials that probably need to comply. Sixty percent of the known TOT properties are located in Three Rivers, and that number is likely to increase.

A property owner is exempt from paying the tax if they are only renting occasionally, equal to 15 days or less in a calendar year, Rita said. Or, if the occupant rents for 30 consecutive days or more that constitutes a “rental” not subject to the TOT.

Rita also said if a property owner not paying the tax contacts her office voluntarily, there is a cost savings.

“For every action we take there is a fee and a possibility of having to pay the back taxes from the day the property was first offered for lodging,” Rita said. “One hotel in Three Rivers is currently making payments on two years of back taxes in order to comply.”

Rita said the flurry of collection activity was mandated by an amendment to the county ordinance that was passed by the Board of Supervisors on May 27, 2010. The change established 15 days as the cut-off, and that really put teeth into the enforcement, Rita said.

A big boon to her department’s efforts has been sharing data with the IRS.

“If an owner claims a rental so they can write off income deductions, we will be sending out a letter to determine the nature of the rental,” Rita said. “But the web-based advertising is still our best source to locate TOT cases of non-compliance.”

There is currently legislation (SB 593) to make Internet vacation-rental companies like VRBO (Vacation Rental By Owner) and AirBnB collect and pay the tax for their clients but these firms are lobbying to prevent its passage. 

In 2015, Rita said the department collected $1.7 million in TOT and, minus her expenses, that’s a tidy sum turned over to the BOS for discretionary spending. The average, she said, is more like $1.4 million but the lodging industry is growing, especially in Three Rivers.  

There are dozens of owners in Three Rivers that Rita said will be receiving notification letters soon. Rita agreed collecting the tax is a win-win for Tulare County because the majority of the tax is paid by visitors who come to vacation and do not live here.

For more information on TOT, call the Tulare County tax collector’s office at 636-5250.  

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