Sevier County STR State and local taxes

Sevier County STR State and local taxes

Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes

I definitely need an expert opinion on this from a veteran in this market. From my understanding, the total tax paid should be 12.75 percent, and what I read from older posts was that 9.75 percent is collected, but hosts are still responsible for the county 3 percent tax (maybe this changed?). Based on what I’m looking at though from both vrbo and Air it seems like they are collecting way more than 9.75 in tax from the customer on my behalf. Also, regarding licenses, I got the business license from sevier county, are there any other licenses needed, perhaps from state level (I’m outside city limits). I also plugged in the address on avalara and it says it’s supposed to be 9.75 (seems like they omit county?)

here is an example of one on Air in sevier county outside city limits that I had:

$299x2 nights = $598

Cleaning fee = $200

Guest service fee = $112.66

Occupancy tax = $112.73

Total paid by guest: $1023.39
I collected $774.06 ($798 -$23.94 host service fee)—————————————————————VRBO example:
5 nights $1498

Cleaning fee $200

Booking amount: $1,698
Lodging taxes we (vrbo) remit: $216.50
guest service fee : $208
Total paid by guest: $2,122.50


Sevier county accomodations tax: $50.94
sevier county general sales and use:$46.70

Tennessee state gen sales and use: $118.86

Total tax paid by vrbo: $216.50

Received payout $1555.6 (I don’t have the subscription so I pay the commission)


thanks 

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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
4y

John, 9.75 is TN state tax.  The additional is the county tax.  You do not need an additional license in Cocke County (although you still remit them taxes), but you do need a license in Sevier County, although they will gladly still take your taxes without it.  ;)  

You are paying taxes on the entire amount of the transaction, other than VRBO or AirBnB's service fees.  You do not pay taxes on those.  I had to fight TN in a sales tax audit last year over this issue, but they finally ruled that VRBO fees are not taxable to me - they are taxable to VRBO.  So they are going to collect this tax on the service fees from the guest through the transaction, and then remit to TN.

Hope this helps.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    @Lucas Carl

  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y

    John, 9.75 is TN state tax.  The additional is the county tax.  You do not need an additional license in Cocke County (although you still remit them taxes), but you do need a license in Sevier County, although they will gladly still take your taxes without it.  ;)  

    You are paying taxes on the entire amount of the transaction, other than VRBO or AirBnB's service fees.  You do not pay taxes on those.  I had to fight TN in a sales tax audit last year over this issue, but they finally ruled that VRBO fees are not taxable to me - they are taxable to VRBO.  So they are going to collect this tax on the service fees from the guest through the transaction, and then remit to TN.

    Hope this helps.

  • Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Collin Hays:

    John, 9.75 is TN state tax.  The additional is the county tax.  You do not need an additional license in Cocke County (although you still remit them taxes), but you do need a license in Sevier County, although they will gladly still take your taxes without it.  ;)  

    You are paying taxes on the entire amount of the transaction, other than VRBO or AirBnB's service fees.  You do not pay taxes on those.  I had to fight TN in a sales tax audit last year over this issue, but they finally ruled that VRBO fees are not taxable to me - they are taxable to VRBO.  So they are going to collect this tax on the service fees from the guest through the transaction, and then remit to TN.

    Hope this helps.

    Thanks Colin, I assumed there could be some audit risk on something like this. It’s great to have confirmation that the fees paid to the sites by guests are not included (I was worried about this being incorrectly included)

    I backed into the numbers, and on VRBO it does indeed seem they are withholding correctly based on what you are saying. $1498 rate + $200 cleaning and $216.50 remitted by vrbo (216.50/1698) is exactly 12.75 percent. Seems like no further action is needed as the host.

    For the AIR example I can’t figure out how they are collecting, and if I’m still on the hook for more (or if they are withholding too much.) if following the VRBO formula (which seems correct),  the air example is $112.73/ (598+200) which equals 14.13 percent (these examples are the same properties so nothing is different from tax entities).

    I’ve been trying to figure out if avalara (my lodge tax) is even relevant in this region. So it seems if you use VRBO it’s not needed, but for AIR I still can’t figure it out (I assume my lodge is not needed but that air may be over withholding)?

  • Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y

    I know Airbnb is hated by many, but does anyone use them in the smokies?

  • Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y

    .

  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Quote from @John Carbone:

    I know Airbnb is hated by many, but does anyone use them in the smokies?


     We use it but are not getting that many books with them on our cabin.

  • Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @John Underwood:
    Quote from @John Carbone:

    I know Airbnb is hated by many, but does anyone use them in the smokies?


     We use it but are not getting that many books with them on our cabin.

    Do you use mylodgetax (avalara) or do you just let Airbnb and vrbo handle all the taxes?  Or do you send any additional money to state or counties other than what air and vrbo remit?

  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Quote from @John Carbone:
    Quote from @John Underwood:
    Quote from @John Carbone:

    I know Airbnb is hated by many, but does anyone use them in the smokies?


     We use it but are not getting that many books with them on our cabin.

    Do you use mylodgetax (avalara) or do you just let Airbnb and vrbo handle all the taxes?  Or do you send any additional money to state or counties other than what air and vrbo remit?

    We inherited a PM with the cabin so he takes care of that. I just manage the PM.
  • Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y
    Quote from @John Carbone:

    I know Airbnb is hated by many, but does anyone use them in the smokies?


    We strongly do not prefer AirBnb as well, but we do use it in the Smokys.  It is location dependent.  The cabins closer to PF are 90/10 vrbo to airbnb, but we have one cabin out in Wears Valley, that when we got it was 95% airbnb.  It took a long time for that to get traction on VRBO.  Have no idea why.  The people we bought it from said they were primary airbnb with very little vrbo.  We had many phone calls with VRBO to try and figure out why this was.  It just didn't make sense to us.  Anyway, that cabin is about 70/30 airbnb now.  

    For us this is how AirBnb works in that region.  It fills in the gaps and also provides those last minute bookings.  BUT it also provides us with the worst guests as well.  Whenever we have a bad guests and go back and look, 99% of the time it was an airbnb booking.

    Both airbnb and VRBO collect and remit the taxes, prior to that it was a pain ;)

  • Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Ken Boone:
    Quote from @John Carbone:

    I know Airbnb is hated by many, but does anyone use them in the smokies?


    We strongly do not prefer AirBnb as well, but we do use it in the Smokys.  It is location dependent.  The cabins closer to PF are 90/10 vrbo to airbnb, but we have one cabin out in Wears Valley, that when we got it was 95% airbnb.  It took a long time for that to get traction on VRBO.  Have no idea why.  The people we bought it from said they were primary airbnb with very little vrbo.  We had many phone calls with VRBO to try and figure out why this was.  It just didn't make sense to us.  Anyway, that cabin is about 70/30 airbnb now.  

    For us this is how AirBnb works in that region.  It fills in the gaps and also provides those last minute bookings.  BUT it also provides us with the worst guests as well.  Whenever we have a bad guests and go back and look, 99% of the time it was an airbnb booking.

    Both airbnb and VRBO collect and remit the taxes, prior to that it was a pain ;)

    Thanks Ken, I’m in a similar situation as you in terms of where the bookings are coming from. So you don’t do any personal filing with any entities for tax purposes on lodging related taxes? Someone I know suggested avalara for this, but maybe this is outdated advice, since air and vrbo seems to be taking the full amount out (including county lodging tax) - and air seems to be taking a little more out. 

  • Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    We have not used anything other going through TNTAP.

  • Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Ken Boone:

    We have not used anything other going through TNTAP.

    Is that only because you owe franchise and excise taxes?
  • Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    No we used TNTAP to submit the taxes, but now that VRBO and AirBnb handle that we just have to go in each month and put in a zero entry.

  • Member since 2018 · 33 posts · 10 votes
    4y

    When we first started a few years ago, the platforms only collected state tax and not the county/city hospitality taxes. Individual owners were responsible for the lodging taxes for county and city. That changed as of 1/1/21, when both platforms began collecting and remitting the lodging taxes as well. If you're seeing posts that say owners have to handle lodging taxes in Sevier County, they might be older posts with outdated information. 

    At this time, I believe that if all your bookings are coming through Airbnb or VRBO, then the only taxes you need to cover are the annual business tax and Franchise/Excise tax through TNTAP, and you don't even need to set up accounts for the other taxes. If you also do direct bookings, though, then you need to cover sales and lodging taxes for those bookings, which means you have to have the accounts open and file monthly reports for them even for months when you don't have any direct bookings.

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