95-029

Response June 21, 1995

Request

June 13, 1995

XXXXX

Re: Request for advisory opinion

Dear XXXXX:

The Division of Real Estate licenses and regulates property managers in this state, including those engaged in nightly rentals in resort areas. As I am sure our Trust Account Auditor XXXXX has told you, we are in the process of drafting administrative rules regulating how property managers are to handle and account for funds received in the nightly rental business.

We are unclear on whether it is the obligation of the owner of the property or his property manager, to collect, account for, and remit local sales and use tax, transient room tax, and resort communities tax.

We would appreciate an advisory opinion on whether these taxes are the owner's liability or his property manager's liability, including which party is responsible for collecting, accounting for, and remitting these taxes.

If you have any questions, please contact me. We appreciate your assistance with this matter.

Sincerely,

XXXXX

June 21, 1995

RE: Advisory Opinion - Responsibility of Property Managers to Assess and Collect Taxes on Nightly Room Rentals in Resort Communities.

Dear XXXXX,

The Commission has received your request for an advisory opinion on the property manager's role in collecting sales tax, transient room tax, and resort communities tax on nightly rentals. Our research indicates as follows:

A. Sales Tax

1. The amount charged for the rental of hotel, motel, or like accommodations for stays of less than 30 consecutive days is subject to Utah sales tax. §59-12-103 (1) (k) Utah Code Ann.

2. Sales tax is a tax on the purchaser, but any vendor who “regularly engages in any activity in connection with the leasing . . . of property located within this state...” is responsible for collecting and remitting sales tax to the Commission. §59-12-107(1)(a)(v) Utah Code Ann. The “vendor” is the person receiving payment for any taxable item or service. §59-12-102(18).

3. Whether the property manager is a vendor who is required to collect and remit sales tax depends on the nature of the property manager's contractual obligations to the business or property owner. If the property manager contracts to receive payment for room rentals on behalf of the business owner, the property manager is a vendor within the meaning of the sales tax statutes. In that case, the property manager is required to obtain a sales tax license and comply with section 59-12-107 of the Utah Code.

B. Resort Communities Tax

1. A qualifying resort community may impose an additional sales tax on transient room rentals. The resort communities tax is combined with other state and local sales taxes to increase the tax rate applied to taxable sales in the resort community. The tax is reported and remitted in the same manner as sales tax.

2. If the property manager is the vendor within the meaning of section 59-12-107 of the Utah Code, the property manager is responsible for collecting and remitting all sales tax, including the resort communities tax.

C. Transient Room Tax

1. Counties may impose a transient room tax on any company or individual doing business as a motel, hotel, or similar public accommodation within the county's boundaries. §59-12-301 (1). Although the transient room tax is a tax on the business owner, and not on the purchaser, the tax is passed through to the purchaser as separate tax which is collected on each room rental. Utah Admin. Rule R865-19S-96.

2. The transient room tax must be reported and remitted monthly or quarterly on a return provided by the Tax Commission or the county as specified by the county ordinance enacting the tax. §59-12-302 Utah Code Ann. and Utah Admin. Rule R865-12L-16. The business or property owner is liable for the transient room tax return, but the property manager may be responsible to file the returns for the business owner under terms of their contract.

This opinion is based upon the facts presented in your letter. Obviously, if there are deviations from these facts, this opinion may be negated.

If you do not agree with this determination, you may appeal to the Tax Commission for a formal hearing. The results of that hearing would constitute a declaratory judgment and be appealable to the Utah State Supreme Court. A Notice of Appeal Rights and a copy of the Utah Taxpayer Bill of Rights are attached.

For the Commission,

Alice Shearer

Commissioner