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Commonwealth's Counties

Bills to Improve Collection of Taxes for Short-Term Rentals Moving Forward

HB 518 (Head) and SB 651 (Vogel) revisit and refine legislation from 2021 that required that taxes due on a sale of transient accommodation be calculated based on the total charges paid by the customer, including any accommodations fee charged by an accommodations intermediary.  HB 518 and SB 651 make clear that the room charge upon which taxes are to be levied includes any fee charged to the customer and retained as compensation for facilitating the sale, whether described as an accommodations fee or by some other name.  The bills require accommodations intermediaries to collect sales and use taxes and transient occupancy taxes and remit them to the Department of Taxation and the locality, respectively.  To improve the ability of local Commissioners of the Revenue and other local staff to correctly attribute payments, the bills require accommodations intermediaries to submit to each locality on a monthly basis the property addresses and gross receipts for all accommodations facilitated by the intermediary in the locality.

In order to address industry concerns about variation among localities in collection practices, the bills direct the Department of Taxation to convene a work group to examine the processes currently used to collect local transient occupancy taxes and make recommendations for improvements.  A report is due by October 31.

VACo supports these bills as amended.  HB 518 has passed the House and Senate and the House has agreed to the Senate’s amendments.  SB 651 has passed the Senate and has been referred to House Finance.

VACo Contact:  Katie Boyle

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