Property owners offering short-term rental of homes, apartments or rooms in Tennessee through online booking websites should collect and remit sales and local lodging taxes, according to Tennessee Attorney General Herbert Slatery.
In an opinion issued on Dec. 1, 2015, Slatery concluded that short-term rentals of lodging arranged through websites such as www.airbnb.com and www.vrbo.com are subject to sales tax and meet the definition of a “hotel,” making them subject to any hotel occupancy privilege tax levied by counties or municipalities. While such online booking websites may facilitate the rental of such properties, he says the property owner is ultimately responsible for collecting and paying these taxes.
The Tennessee Hospitality & Tourism Association praised the attorney general’s decision.
“We are excited that the AG has opined that short-term rentals are legally subject to both sales and lodging taxes. In some counties, the amount of tax lost is significant – since Davidson County began to enforce the collection of the tax it is estimated that over $1.2 million in just lodging taxes will be collected in 2016 on short-term rentals,” said TnHTA President & CEO Greg Adkins.
In Sevier County, short-term rental owners currently would add applicable state and local sales taxes, plus the lodging tax for Sevierville (2%), Pigeon Forge (2.5%), Gatlinburg (3%), or Sevier County (3%) for properties outside those city boundaries.
“In the past decade, the internet has transformed the way we buy and sell goods and services, resulting in an explosion of new businesses,” said Ken Maples, a Pigeon Forge hotel owner who serves as chairman of the board of the TnHTA. “It is now extremely easy for an individual to advertise and rent a property such as a condo, cabin, house, or even a room for short periods of time. Since these short-term rentals are fundamentally no different than regular lodging properties, it is only fair that those who make a profit from on-line or advertised short term rentals by owner should pay all applicable local and state sales and lodging taxes.”
The attorney general issued the opinion at the request of State Rep. Dale Carr, a republican representing the 12th District in Sevier County.
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