Recently I received a notice from the Pennsylvania Department of Revenue regarding Pennsylvania’s Hotel Occupancy Tax. I was about to toss it in file bin number nine; however, I decided to read the notice in detail, knowing clients I serve may be getting similar communications.
Many taxpayers have been receiving notices regarding various potential tax liabilities due to the recently enacted Pennsylvania Tax Amnesty program. The state has queried their data looking for potential unpaid taxes and is attempting to notify candidates who may benefit from the amnesty program. It is wonderful that the state has taken a position of trying to inform those who may owe back taxes; however, I wish they would have cleaned up their data prior to query and correspondence.
Pennsylvania hotel occupancy tax sure sounds like a tax that most taxpayers would not be subject to pay. After all, I do not own a hotel. As it turns out, there are many more hoteliers than one might assume.
Have you ever listed a room or an apartment for rent on Airbnb? How about your timeshare through RedWeek? Has anyone paid you to stay in any property located in Pennsylvania for a short period? If so, you are a hotelier and are most likely subject to the tax.
One might argue that they are not a hotelier or subject to the tax because they are not providing the typical services a hotel provides, such as linens or cleaning services. Unfortunately, for the purposes of the hotel tax, the only requirement is that the sleeping accommodations were provided for less than 30 days.
The hotel occupancy tax is 6%. An additional 1% tax is added for local taxes collected in Allegheny and Philadelphia counties. You add the tax to the amount charged for the accommodations and remit the collected tax to the Department of Revenue. To do so, one must register for a Sales, Use, and Hotel Occupancy Tax License.
The tax amnesty program runs from April 21, 2017 through June 19, 2017, so time is of the essence if you are concerned about owing back taxes. The amnesty program provides relief by allowing you to pay the tax and half of the interest on eligible back taxes. The other half of the interest and penalties are waived if you properly apply for the Tax Amnesty program.
Upon further review, I concluded that I did not have activity subject to the hotel occupancy tax so there is nothing more for me to do other than to have a good night’s sleep!
For more information about the Tax Amnesty program, visit www.backtax.pa.gov or call 1-844-727-8283.
For more information regarding the sales, use and hotel occupancy tax, visit www.revenue.pa.gov
By Brett Tennis, CPA, Principal