Placer County set to sweep up cleaning tax
February 14, 2008
Placer County officials and Tahoe property managers are at odds over the payment of a “cleaning tax” that the county is seeking following a recent audit.
The tax is part of the lodging tax that is levied on properties that are rented for 30 days or less.
County personnel say the tax was due all along.
But several property managers in the area do not remember ever having to collect the Transient Occupancy Tax based on cleaning labor.
“In the last 18 years that I’ve been doing business, they have not done this,” said Julie Weed of West Lake Properties.
Weed, along with others including John Falk, legislative advocate for the Tahoe Sierra Board Realtors, say Placer County decided to reinterpret the definition of rent last summer as it appears in the bed tax guidebook.
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And they accuse Placer County of sending short notification of the cleaning tax to management firms.
Jim Plumbridge of Wells and Bennett said he received a letter on Jan. 11 2008, notifying him that he should start collecting the tax by Jan. 1. Plumbridge’s firm represents 200 properties and he wonders if county tax collectors are only imposing the tax on District 5 because of the high volume of tourists.
Placer County officials point to their tax code, which they say has always included labor in the definition of rent, and is applied throughout the county. The Tahoe area pays 10 percent of rental charges, while the western portion pays 8 percent in bed taxes. The arrangement was approved by county voters, Falk said.
“All costs that are mandatory to rent the room are subject to TOT tax,” stated Placer County’s Tahoe Manager Jennifer Merchant.
The property management firms were not collecting the tax and not paying them, she said.
Merchant explained the code has not changed since its inception in 1964.
Falk counters that Placer County Transient Occupancy Tax changes, “were unilaterally imposed upon property managers in the eastern portion of the county within the Sierras,” and, “the [Placer County] staff initiated this process rather than following policy direction from our elected officials.”
A letter was sent to property owners notifying them that the tax was to be collected by the first of the year, according to Candi McCord, the deputy director of administrative services in Placer County.
“It was fairly short notice, again the idea being that the tax should have been paid all along,” she said.
The summer time audit uncovered that the taxes on cleaning services were not being paid and originally levied retroactive fees reaching back to 2006, Merchant said.
Russ Baruh of Hauserman Rental Group Vacation Rentals claimed one property manager was asked to pay $50,000 in back taxes.
On Dec. 6 county personnel sent notification to the management firms that they would not have to pay back taxes on cleaning because many had never collected it and there was, “a lot of confusion,” McCord said. The county’s executive office made the call not to collect the back tax, McCord explained.
Now Falk, who represents 1,100 members within the Tahoe Sierra Board Realtors, has already met with the board’s attorney, but specified in a phone interview that a court case would be the wrong way to go.
“This does not need to be an adversarial discussion,” he said. “We don’t want to pursue this through the courts.”
County tax collectors are having problems with large hotels not charging resort fees, said Merchant. Those include valet parking and other services. Hotels are not dealing with the cleaning tax, because Merchant explained, “they don’t separate out their cleaning.”
The misunderstanding, she indicated, may be that the management firms subcontract their cleaning services because of the nature of renting a home instead of a hotel.