TOT (aka “Hotel Tax”)

Here are some of the San Francisco laws pertaining the Transient Occupancy Tax (TOT) also known as the “Hotel Tax.” This tax is levied on the rent collected for short-term rentals (i.e. rentals for 30 days or less) in San Francisco.

Article 7 of the San Francisco Business and Tax Regulation Code sets out the City laws for the TOT.

Click here to read the full text of Article 7.

Here are some of the main sections from Article 7:

Sec. 502  Imposition and Rate of Tax:     There shall be paid a tax of eight percentum on the rent for every occupancy of a guest room in a hotel in the City and County. (Note: the rate has been changed and now varies according to the location of the rental property and date of rental)

Sec. 503  Occupant to Pay Tax to Operator:   Unless prohibited by the laws of the United States or the State of California, or exempted by the provisions of this Article, every occupant occupying a guest room in a hotel in this City and County shall be required to pay the tax imposed herein to the operator along with the rent for the occupancy. This obligation is not satisfied until the tax has been paid to this City and County, except that a receipt indicating payment of the rent from an operator maintaining a place of business in this City and County or from an operator who is authorized by the Tax Collector to collect the tax shall be sufficient to relieve the occupant from further liability for the tax to which the receipt refers.

Sec. 504  Collection of Tax by Operator; Receipt for Occupant; Rules for Collection Schedules: Every operator maintaining a place of business in this City and County as provided in Section 503 herein, and renting guest rooms in this City and County to an occupant, not exempted under Section 506 of this Article shall, at the time of collecting the rent from the occupant, also collect the tax from the occupant and on demand shall give to the occupant a receipt therefor. In all cases in which the tax is not collected by the operator, as aforesaid, the operator shall be liable to the Tax Collector of the City and County for the amount of the tax due on the amount of taxable rent collected from the occupant under the provisions of this Article, the same as though the tax were paid by the occupant. In all cases of transactions upon credit or deferred payment, the payment of tax to the Tax Collector may be deferred in accordance therewith, and the operator shall be liable therefor at the time and to the extent that such credits are paid or deferred payments are made in accordance with the rate of tax owing on the amount thereof.

The Tax Collector shall have the power to adopt rules and regulations prescribing methods and schedules for the collection and payment of the tax and such methods and schedules shall eliminate fractions of one cent.

Sec. 501 Definitions:

When used in this Article the following terms shall mean or include:

(a) “Operator.” Any person operating a hotel in the City and County of San Francisco, including, but not limited to, the owner or proprietor of such premises, lessee, sublessee, mortgagee in possession, licensee or any other person otherwise operating such hotel.

(b) “Occupant.” A person who, for a consideration, uses, possesses, or has the right to use or possess any room in a hotel under any lease, concession, permit, right of access, license to use or other agreement, or otherwise.

(c) “Occupancy.” The use or possession, or the right to the use or possession of any room or apartment in a hotel or the right to the use or possession of the furnishings or to the services and accommodations accompanying the use and possession of the room.

(d) “Hotel.” Any structure, or any portion of a structure, including any lodginghouse, roominghouse, dormitory, Turkish bath, bachelor hotel, studio hotel, motel, auto court, inn, public club, or private club, containing guest rooms and which is occupied, or is intended or designated for occupation, by guests, whether rent is paid in money, goods, labor, or otherwise. It does not include any jail, hospital, asylum, sanitarium, orphanage, prison, detention, or other building in which human beings are housed and detained under legal restraint.

(e) “Guest Room.” A room occupied, or intended, arranged, or designed for occupation, by one or more occupants. Every 100 square feet of superficial floor area in a dormitory is a guest room.

(f) “Rent.” The consideration received for occupancy valued in money, whether received in money or otherwise, including all receipts, cash, credits, and property or services of any kind or nature, and also the amount for which credit is allowed by the operator to the occupant, without any deduction therefrom whatsoever.

However, in order to clarify whether and to what extent the provisions and definitions above apply to website vacation rental companies and their customers (like Airbnb), the Tax Collector of San Francisco promulgated Regulation 2012-1.

Relevant provisions of Reg 2012-1 include:

(e) Interpretation:

(i) A “guest room” within the meaning of the TOT includes a private residence (whether a single family residence, condominium, apartment, or any other kind of residence) or any portion thereof, including but not limited to any room or space or portion thereof, without regard to whether such space is shared with or accessible to others. Occupancy of such guest room is subject to the TOT.

(ii) The full amount that an occupant pays to secure or obtain the right to occupy a guest room is “rent” subject to the TOT, regardless of whether any portion of that payment is characterized as a “service fee” or otherwise. The full amount received by a website company, or any other person acting as merchant of record in connection with an occupancy transaction, is “rent” subject to the TOT.

(iii) A website company, or any other person acting as merchant of record who receives rent in connection with an occupancy transaction, is an “operator” who is responsible for collecting the TOT owed by the occupant and for remitting the TOT to the City. Any person receiving such rent shall provide a receipt to the occupant. Such receipt shall include a separate line item specifically identifying the TOT.

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