California legislation seeks to create state-run vacation rental tax revenue system

New California legislation seeks to create a state-run system for collecting and dispensing transient occupancy tax revenue from short-term vacation rentals.

In California, nearly every city and county levies these taxes on lodging, and the revenue collected is typically used to support essential government services, according to the office of state Sen. Mike McGuire, D-Healdsburg, who introduced the bill. It stated that is more difficult for short-term vacation rentals “because hosts are not always aware of the requirement to collect and remit these taxes, and local governments.”

His bill, Senate Bill 555, would create a statewide TOT collection program administered by the California Department of Tax and Fee Administration for local jurisdictions who choose to participate.

“This program would require short-term vacation rental platforms, such as Airbnb or VRBO, to collect the appropriate TOT from customers when a short-term rental is booked through the platform. The platform would then remit the funds collected to CDTFA, who would then distribute the revenue to the city or county,” McGuire’s office stated.

This program would be an opt-in for local municipalities, and those municipalities would be required to enact an ordinance to participate.

This bill does not prohibit local agencies who want to continue with their own Voluntary Collection Agreements with platforms from doing so. Rather, SB 555 gives jurisdictions who have not found success in entering Voluntary Collection Agreements, which are the majority of cities and counties across California, with hosting platforms the ability to collect this vital and untapped revenue. the senator stated.

The bill is expected to be heard by the Senate Judiciary Committee in the coming weeks.