Understanding How to File Taxes in Nashville (and all Tennessee)

[Jonathan117]

I made a li'l flowchart to help you make sense of the various taxes needed to file and pay when you have a short-term rental property in Nashville, Tennessee. j

This assumes you have already applied for your tax accounts with the city of Nashville (Hotel Occupancy Privilege) and the county/state (through TNTAP, the statewide automated tax filing system). 

If you are using other services besides Airbnb to rent your property (e.g. V-R-B-O), they don't all have automated collection agreements with the state yet, so you will need to collect and file county and state sales taxes for any of those reservations through TNTAP yourself.

THERE IS SOME CONFUSION AROUND WHAT TAXES AIRBNB IS COLLECTING. AS OF the posting date of this thread, the Airbnb instructions incorrectly state that they are collecting Occupancy taxes. (They are using the term in a general sense, as the terms in each tax jurisdiction may differ). However it is not truly occupancy tax that they are collecting in Nashville. They are only collecting county and state sales taxes. YOU ARE RESPONSIBLE FOR HOTEL OCCUPANCY PRIVILEGE TAX as of now. I hope the moderators correct this small semantic error because it is causing a lot of confusion! 

[Margaret311]

I got a similar notice from TN Dept of Rev (TNTAP) indicating I was overdue on sales tax payments from April 1 forward. I had assumed Airbnb collecting/remitting payment on my behalf would be seemless (why I thought that, I can't say!?), but now I'm getting a bill for over $500 in tax and late fees. When I log into Airbnb, it shows the tax being collected and paid in detail, but I can't find any information online as to how to rectify this. Other than to contact the black hole of TNTAP.

I love that they went to great lengths to clarify that we still owe occupany tax, but nothing on how we get out of the sales tax debacle. If anyone has additional info on this - please chime in! Thanks, 

[Margaret311]

I called the TNTAP help number, waited 15 minutes, and was told to just close my TNTAP sales & use tax account to solve the issue of being delinquent and getting billed. Click on your Account number, on the right click on Close Account, enter the close date of 3/31/2018, and submit. The End. If only that little tidbit had been communicated when they decided to have Airbnb start submitting on our behalf. I suspect this isn't the end, but I'll keep my fingers crossed.

[Rhonda117]

Margaret,

I have gotten these notices as well and it has been so confusing.   I think I have paid for the sales tax on TNTAP that I shouldn't have been paying.  I haven't been able to get a response from them either.   How would I go about getting the amount that I paid back?

Rhonda

[Ryan-and-Amy0]

Margaret, from what I understand we still have to file in our TNTAP accounts even if we have zero revnue to report (or close them all together). If we don't file a return each month, we are charged a $15 late fee.

TNTAP makes some pretty silly assumptions about how much tax I owe. I set that right by going in an filing a return. It takes a day to rectify usually. Ignore those big numbers they are showing you. 

You could get rid of the account if you are only renting through AirBnB and not VRBO, but I rent through both and have to pay sales tax on the VRBO income. I agree it's a pain. Also, if you are making more than $10,000 a year on AirBnB you have to pay a business tax as well. So, you could potentially close your Sales Tax account and keep your Business Tax account open in that case. It all makese renting a guest room our very complicated, doesn't it! Well, at least we get to do it. Hope that helps!

[Virginia39]

Jonathan, thank you, this is very helpful info. Sounds like I DO NOT need to get a tax number for sales and use tax since Airbnb is already collecting and remitting for this. How does the state know that the sales and use tax is being remitted on my behalf and for my property? And, with regard to Erika's comment on "business tax" ... is this another tax that I must remit for having a STR if I earn over $10K? 

[Lizzie]

Great diagram @Jonathan117, thanks for sharing 🙂

[Olivia134]

I wish I saw this before I made all the calls about their confusing language. I thought my hotel occupancy taxes were being paid twice. Wrong! Metro Collections Office told me they contacted Airbnb months ago and asked them to change the language, but they still haven't. Hopefully they do soon and thanks for the post. 

[Catherine1089]

Jonathan you are such a wonderful wealth of information- thank you!!!!!  🙂

[Robin143]

oh boy, i just started actively in August in Davidson Co.  i haven't filed nor collected anything yet, as ive been trying to figure it out. from what i understand here- the sales and state tax are being collected and i don't need to do anything. the occupany tax is not, and i need to download a form and figure out what i need to collect and how and when to pay?  (wow they have made this complicated)  additionally, if i am owner occupied do i really need a business lisence?  Lastly, do you all collect for the tax amount in order to keep your margins in tact?  Jonathan - thanks for your expertise on all of this.   Robin

[Cody78]

Great question about collecting these taxes from them yourself. I was wondering the exact same thing, and if so, how to go about it? Venmo? Cash request within Airbnb? Any insight here would be appreciated!

[Robin143]

Cody,  there is a spot on your booking settings where you set your pricing that allows you to add any additional fees.  This is where i plan to place it if we indeed still need to collect separately from what is already being collected.

[Tom-And-Tina0]

Hi Johnathan,

I appreciate your help and want to clarify and understand if sales taxes and occupancy taxes paid on cleaning fees can be recouped at tax time?

Here’s my understanding of what I’m paying:

Sales tax, state and local, which Airbnb collects, on not only the rent income, but on cleaning fee. This doesn’t seem right, because we literally pay our housekeeper the amount we psy our guest.

Occupancy Tax:  we figure that on the gross payout?  Do you mean the amount before they deduct their host fee?  Or the amount collected for rent + cleaning fee - Airbnb jost fee?  If it includes the cleaning fee, which we already paid 9.25% on, and now we pay another 4% on, we’re paying a tax of 13.25% on the cleaning fee, but then turn around and pay the full amount collected from our guest to our housekeeper. Essentially, we’re out 13.25% of the cleaning fee. How do we recoup taxes paid on ‘income’ that isn’t really income?

[Tom-And-Tina0]

Meant to say we pay our housekeeper the exact amount we COLLECT from our guest. 

[Jonathan117]

Hi Tom & Tina,

These are great questions for your tax preparer! Unfortunately I am not an expert so I don't want to give you bad info. My understanding is you have to declare cleaning fees as income, but then you can also deduct them as expenses, so it's typically a wash.

I recommend checking with the metro tax people to clarify whether you need to declare cleaning fees as part of the gross income. I currently do declare cleaning fees as income.

I charge a little more to the guest than I pay to my housekeeper to cover that extra discrepancy you mention. 

HTH!

[Tom-And-Tina0]

Thank you Jonathan!

Any chance we could band together to get Airbnb to change the terminology of ‘ occupancy tax“ to ‘sales tax’ when they label what theyre collecting?  For a minute I was collecting occupancy tax separately from our guests via the Airbnb resolutions function. But it became so confusing   For the guests that I just gave up.