AAR Comments on ADOR’s Proposed Rule on Lodging Tax Collections for Short-Term Rentals

AAR Comments on ADOR’s Proposed Rule on Lodging Tax Collections for Short-Term Rentals

December 3, 2024

Alabama REALTORS® reviewed and commented on a recent rule proposal from the Alabama Department of Revenue (ADOR) on lodging taxes. The proposed rule published in October is intended to provide guidance on a new 2024 law that mandates additional responsibilities for companies that manage short-term rentals to collect and report on lodging taxes. 

AAR worked with ADOR and legislators during the 2024 legislative session and succeeded in having the law amended to exempt property managers who rent properties as principal residences for a certain time period. A summary of these advocacy efforts was reported in AAR’s final 2024 Capitol News and Notes publication here.

AAR sent a brief comment requesting ADOR to broaden the exemption in the proposed rule to  match the law’s exemption. Specifically, the law provides exemptions for certain entities including property managers who manage and lease properties as principal residences for one month or more. While the new law exempted these entities from the new collection and reporting requirements for lodging taxes, the proposed rule in sub-section (4) only exempted the entities from providing the annual information report. As a reminder, for over a decade, state law has required the collection of lodging taxes on any rental with a lease term under 6 months. 

A full copy of the proposed rule is below. To learn more about the rule, ADOR is holding a virtual public hearing on December 10 at 1:30 PM. To participate or listen to the hearing, you must contact ADOR at taxpolicy@revenue.alabama.gov and include the proposed rule number 810-6-5-.22.01. 

ALABAMA DEPARTMENT OF REVENUE SALES, USE & BUSINESS TAX DIVISION

NOTICE OF INTENDED ACTION

AGENCY NAME: Alabama Department of Revenue

RULE NO. AND TITLE: 810-6-5-.22.01  Collection and Reporting Requirements for Accommodations Intermediaries and Accommodations Providers

INTENDED ACTION: New

SUBSTANCE OF PROPOSED ACTION:

Pursuant to the passage of Act 2024-334, The Alabama Tourism Tax Protection Act, this rule is being promulgated to provide the necessary guidance on the collection and reporting requirements for accommodations intermediaries and accommodations providers.

TIME, PLACE, AND MANNER OF PRESENTING VIEWS:

A public hearing will be conducted at 1:30 P.M. on Tuesday, December 10, 2024 via web-conference. To participate in the upcoming web-conference public hearing please contact the Tax Policy and Governmental Affairs Division at Taxpolicy@revenue.alabama.gov or 334-242-1380 to obtain the appropriate sign-in information for a specific public hearing date. Copies of the rule(s) can be obtained at http://www.revenue.alabama.gov/tax-policy/.

All interested parties may present their views in writing to the Secretary of the Alabama Department of Revenue, Room 4131, Gordon Persons Building, 50 N Ripley Street, Montgomery, Alabama 36132 at any time following publication of the notice up until the conclusion of the hearing. Interested parties may also may present their views during the web-conference.

FINAL DATE FOR COMMENT AND COMPLETION OF NOTICE:

Tuesday, December 10, 2024

CONTACT PERSON AT AGENCY:

Nicci Adams

Alabama Department of Revenue

4131 Gordon Persons Building Montgomery, Alabama 36132

(334) 242-1380                                                            

 

810-6-5-.22.01        Collection and Reporting Requirements for

Accommodations Intermediaries andAccommodations Providers.

 

  1. Definitions.
    1. ACCOMMODATIONS INTERMEDIARY. Any person, firm, or corporation, other than an accommodations provider, that facilitates renting, furnishing, lodging, or accommodation transactions subject to the tax levied under §40-26-1, Code ofAla. 1975, and charges a room fee or an accommodations fee to the customer, which it retains as compensation for such facilitation. Facilitating transactions include brokering, coordinating, or in any other way arranging for the purchase of the right to use accommodations via a transaction directly, including via one or more payment processors, between a customer and an accommodations provider.
    2. ACCOMMODATIONS PROVIDER. Any person, firm, or corporation, engaging in the business of transactions subject to the tax levied under §40-26-1, Code of Ala. 1975, that has an active lodgings tax account with the department and collects and remits lodgings tax on the accommodations that are rented directly by the owner of the accommodation.
    3. HOTEL. Any public lodging establishment that is owned by a single entity or person; contains 15 or more individual sleeping room accommodations; offers rental units with daily or weekly rates; has a central office on the property with specified hours of operation; has a bathroom for each rental unit; is recognized as a hotel in the community in which it is situated; and possesses a permit from the Alabama Department of Public Health to operate as a hotel.
    4. PROFESSIONAL PROPERTY MANAGEMENT COMPANY. A licensed real estate brokerage firm with a physical storefront location authorized and licensed under §34-27-30, Code of Ala. 1975, to engage in the business of property management services on behalf of property owners.
    1. ROOM CHARGE. The full retail price paid by the guest for an accommodation, including any accommodations fee and any other fees or charges. This includes the charge for the use or rental of personal property and services furnished in the room or accommodation.
  1. Collection and Remittance Requirements.
    1. Except as provided in paragraph (2)(b), the accommodations intermediary shall collect and remit the tax imposed by Chapter 26 of Title 40 for the facilitation of lodgings transactions subject to the tax levied under §40-26-1, Code of Ala. 1975, and parallel local levies, for transactions occurring on or after January 1, 2025. The tax shall be imposed on the room charge.
    2. When an accommodations intermediary facilitates the transaction on behalf of an accommodations provider, the taxes collected may be remitted to the accommodations provider, when there is an executed written agreement or contract specifying the responsible party for remitting such taxes.
  2. Annual Informational Report.
    1. Every accommodations intermediary and accommodations provider shall annually submit a report to the department that includes information for accommodations that were rented or furnished during the previous year. The annual informational report must be filed electronically by April 20 of the calendar year succeeding the year for which the annual informational report is provided. The first annual informational report is due no later than April 20, 2026.
    2. The annual informational report must include the following information for the previous calendar year:
      1. The classification of either accommodations intermediary or accommodations provider.
      2. The physical address of each accommodation that was rented or furnished greater than 14 days.
      3. If any of the reported accommodations are made pursuant to an executed written agreement or contract specifying the responsible party for remitting the lodgings taxes, indicate which accommodation(s) this includes and who the responsible party is for remitting the lodgings taxes on these transactions.
  3. Exemptions from Annual Informational Report. The following entities shall be exempt from the annual informational report described in paragraph (3):
    1. Professional property management companies that either collect and remit the tax levied under §40-26-1, Code of Ala.1975, or manage properties leased for a month or more as the principal residence of the tenant. 
    1. Hotels that collect and remit the tax levied under §40-26-1, Code of Ala. 1975.
    1. A destination marketing organization whose primary purpose is the promotion of tourism and receives funding from taxes collected and remitted pursuant to §40-26-1, Code of Ala.1975.
    2. Providers of accommodations defined under §40-26-1(d), Code of Ala. 1975, such as marine slips, tent camping, and RV parks, that collect and remit the tax levied under §40-26-1, Code of Ala. 1975.

Author: Christy Vandevender

Statutory Authority: §§ 34-27-30, 40-2A-7(a)(5), 40-2A-11, 40-23-1, 40-26-1, and 40-26-1.1, Code of Ala.1975

History: New Rule: Published                                                  ; effective                         .