Hotel Tax and Occupancy Tax Laws in North Carolina

1. What is the current hotel tax rate in North Carolina?

The current hotel tax rate in North Carolina varies by locality, as it is imposed at the city or county level rather than statewide. In general, the hotel tax rates in North Carolina typically range from 3% to 7%, with some cities and counties having additional local occupancy taxes. It is essential for hotel owners and operators to be aware of the specific tax rates applicable to their location to ensure compliance with state and local tax laws.

2. Are there any exceptions or exemptions to the hotel tax in North Carolina?

In North Carolina, there are certain exceptions and exemptions to the hotel tax regulations. Some common exemptions to the hotel tax in North Carolina include:

1. Long-term rentals: Hotels or accommodations that are rented for an extended period, typically 90 days or more, are often exempt from hotel taxes in North Carolina.

2. Non-profit organizations: Certain non-profit organizations, such as religious, charitable, and educational institutions, may be exempt from collecting and remitting hotel taxes.

3. Government employees: Accommodations used solely by government employees on official business are usually exempt from the hotel tax.

4. Federal, state, and local government employees may also be exempt from paying hotel taxes in certain situations.

It is important for hoteliers and guests to be aware of these exemptions to ensure compliance with North Carolina tax laws. It is recommended to consult with a tax professional or the North Carolina Department of Revenue for specific details on exemptions and exceptions to the hotel tax in the state.

3. How is the hotel tax collected and remitted to the state?

Hotel tax collection and remittance to the state typically follows a specific process mandated by the relevant state and local laws. The hotel tax is collected by lodging establishments from guests at the time of check-out, usually as a percentage of the room rate. The hotel then holds these funds in a separate account until they are due for remittance to the state tax authority. The specific procedures for remitting the tax vary by jurisdiction, but generally, hotels are required to file regular tax returns with the state, detailing the amount of tax collected during a specific period, along with accompanying payments. Failure to comply with these requirements can result in penalties and fines for the hotel. It is crucial for hotels to understand and adhere to the specific tax laws and regulations applicable to them to ensure compliance and avoid any legal issues.

4. Are short-term rentals such as Airbnb properties subject to the hotel tax in North Carolina?

In North Carolina, short-term rentals such as Airbnb properties are generally subject to the state’s hotel tax, also known as occupancy tax. This tax is imposed on accommodations that are rented out for periods of less than 90 days, which includes vacation rentals, bed and breakfasts, and properties listed on platforms like Airbnb. The hotel tax rate in North Carolina varies by county and can range from 6% to 8%, with some areas having an additional local occupancy tax on top of the state rate. It is important for property owners or hosts on Airbnb to understand and comply with these hotel tax laws to avoid potential penalties or fines for non-compliance. It is advisable to consult with a tax professional or local authorities for specific guidance on hotel tax requirements in North Carolina and how they apply to short-term rental properties like Airbnb listings.

5. What are the penalties for non-compliance with the hotel tax laws in North Carolina?

Non-compliance with hotel tax laws in North Carolina can result in a number of penalties, including but not limited to:

1. Civil Penalties: Failure to collect, report, or remit the appropriate hotel occupancy taxes can lead to civil penalties imposed by the state revenue department. These penalties may include fines and interest on the unpaid taxes.

2. Legal Action: The state revenue department may pursue legal action against businesses that fail to comply with hotel tax laws. This can result in costly litigation and potential court-ordered penalties.

3. License Revocation: Hotels and other lodging establishments that repeatedly violate hotel tax laws may have their business licenses revoked or suspended. This can have serious implications for the operation of the business.

4. Reputation Damage: Non-compliance with tax laws can also damage a business’s reputation with both customers and the local community. This can lead to loss of business and negative publicity.

5. Criminal Charges: In extreme cases of non-compliance, criminal charges may be brought against individuals or businesses that intentionally evade hotel tax laws. This can result in fines, penalties, and even imprisonment.

Overall, it is crucial for businesses in North Carolina to understand and adhere to hotel tax laws to avoid these potential penalties and consequences.

6. Are online travel agencies (OTAs) responsible for collecting and remitting the hotel tax in North Carolina?

In North Carolina, online travel agencies (OTAs) are not responsible for collecting and remitting the hotel tax. The responsibility for collecting and remitting hotel taxes typically falls on the hotels or lodging establishments themselves under state law. However, OTAs may have agreements with the hotels to collect taxes on their behalf in some cases. It’s important for hotels to understand and comply with the specific tax laws and regulations in North Carolina to ensure proper collection and remittance of hotel taxes to the appropriate taxing authorities. Failure to comply with these tax laws can result in penalties and fines for the hotel establishments. It is always recommended for hotels to consult with legal or tax professionals to ensure compliance with hotel tax laws in North Carolina.

7. Can local jurisdictions in North Carolina impose their own additional occupancy taxes on top of the state tax?

Yes, local jurisdictions in North Carolina have the authority to impose their own additional occupancy taxes on top of the state tax. These local occupancy taxes are often referred to as local occupancy tax or local room occupancy tax. The rate and collection of these local taxes are determined by each individual county or municipality within North Carolina.

1. Local occupancy taxes are typically collected by lodging establishments, such as hotels, motels, and vacation rentals, on behalf of the local jurisdiction.
2. The revenue generated from these local occupancy taxes is often used to fund local tourism initiatives, infrastructure improvements, or other community projects.
3. It is important for visitors and lodging establishments to be aware of these additional taxes when planning or budgeting for a trip to a specific area in North Carolina.
4. The rates of local occupancy taxes may vary from one jurisdiction to another, so it is advisable to check with the specific county or municipality where the lodging is located for the most up-to-date information.
5. Compliance with both state and local occupancy tax laws is essential for lodging establishments to avoid any potential legal issues or penalties.
6. Overall, the ability for local jurisdictions in North Carolina to impose their own additional occupancy taxes provides them with a mechanism to support and enhance their local tourism industry and economy.

8. Are there any reporting requirements for hotels to disclose their occupancy tax collections in North Carolina?

Yes, hotels in North Carolina are required to report and disclose their occupancy tax collections to the relevant taxing authorities. The specific reporting requirements may vary depending on the local jurisdiction where the hotel is located. Generally, hotels are required to keep detailed records of their occupancy tax collections and submit periodic reports to the tax authorities. These reports typically include information such as the total amount of room revenue generated, the amount of occupancy taxes collected, and any exemptions or refunds claimed. Failure to comply with these reporting requirements can result in penalties or fines for the hotel. It is essential for hotels to stay informed about the specific reporting requirements in their area to ensure compliance with North Carolina’s occupancy tax laws.

9. How are extended stay hotels or long-term accommodations treated under the hotel tax laws in North Carolina?

Extended stay hotels or long-term accommodations are typically treated differently under hotel tax laws in North Carolina compared to traditional short-term stays. In North Carolina, the tax laws generally require hotels, motels, and other lodging establishments to collect and remit occupancy taxes on rental of accommodations for periods of less than 90 consecutive days. However, for stays lasting 90 days or longer, extended stay hotels or long-term accommodations may be exempt from the standard hotel tax rates or may be subject to a different tax rate.

1. Some jurisdictions in North Carolina may offer exemptions or reduced rates for stays exceeding a certain length of time to encourage longer-term stays and accommodate travelers with extended housing needs.
2. Extended stay hotels may be required to keep detailed records of guests’ lengths of stay and report these to the appropriate tax authorities to ensure compliance with tax laws.
3. It is important for extended stay hotel operators to be familiar with the specific tax regulations in their jurisdiction to accurately assess and collect the correct amount of occupancy taxes from guests.

10. Are there any specific guidelines for determining when a guest is exempt from paying the hotel tax in North Carolina?

In North Carolina, there are specific guidelines that determine when a guest may be exempt from paying the hotel tax. These exemptions are outlined in the North Carolina General Statutes and include the following scenarios:

1. Religious, charitable, and educational organizations may be exempt from hotel occupancy taxes if they meet certain criteria and provide proper documentation.

2. Guests who stay for an extended period beyond a certain number of consecutive days, as specified by local regulations, may also be exempt from paying the hotel tax.

3. Some government employees, such as military personnel on official orders, may be exempt from hotel occupancy taxes.

4. Guests who are staying for medical reasons or treatments may qualify for exemption from the hotel tax.

5. Certain reservation types, such as those made through a federal or state government travel contract, may also be exempt from the hotel occupancy tax.

It is essential for hotels and lodging establishments to familiarize themselves with these guidelines to ensure compliance with North Carolina’s hotel tax laws and to properly administer exemptions when applicable.

11. Can hotels offer tax-exempt status to guests who are traveling for specific purposes, such as government employees or non-profit organizations?

Hotels can offer tax-exempt status to guests who are traveling for specific purposes, such as government employees or non-profit organizations, under certain conditions. These exemptions are typically granted for official government business or non-profit activities that meet specific criteria outlined by the relevant tax laws. However, the process for implementing tax-exempt status varies depending on the jurisdiction and specific regulations in place.

1. Hotels may require guests to provide documentation proving their eligibility for tax-exempt status, such as a government-issued identification card for government employees or a tax exemption certificate for non-profit organizations.

2. It is essential for hotels to maintain accurate records of tax-exempt transactions to comply with local tax laws and regulations.

3. Hotels should also ensure that they are fully informed about the conditions under which they are allowed to offer tax-exempt status to guests to avoid any potential legal issues or liabilities.

In conclusion, while hotels can offer tax-exempt status to guests traveling for specific purposes such as government employees or non-profit organizations, it is crucial to follow the relevant tax laws and regulations to avoid any potential issues.

12. Are there any restrictions on how hotels can use the revenue generated from the hotel tax in North Carolina?

In North Carolina, there are specific restrictions on how hotels can use the revenue generated from the hotel tax. The revenue collected from hotel taxes must be used for promoting travel and tourism, such as marketing and advertising efforts to attract visitors to the state. This revenue must also be utilized for enhancing tourism-related infrastructure and facilities, which can include funding for convention centers, visitor centers, and other tourism-related projects. Additionally, the revenue generated from hotel taxes cannot be used for general governmental purposes or unrelated expenses that do not directly benefit the tourism industry. These restrictions ensure that the funds collected from hotel taxes are reinvested back into the tourism sector to further stimulate economic growth and development within the state.

1. Promotion of travel and tourism.
2. Enhancement of tourism-related infrastructure and facilities.

13. Are there any recent changes or updates to the hotel tax laws in North Carolina that hoteliers should be aware of?

Yes, there have been recent changes to hotel tax laws in North Carolina that hoteliers should be aware of. Some of the key updates include:

1. Senate Bill 849, signed into law on August 23, 2019, allows for the increase of the local room occupancy tax rates in several counties, including Wake, Mecklenburg, and Orange counties. This means that hoteliers operating in these areas must adjust their tax collection and reporting practices to accommodate the new rates.

2. Another notable change is the implementation of House Bill 118, which went into effect on January 1, 2020. This bill requires online travel companies (OTCs) to collect and remit the appropriate hotel occupancy taxes on the retail rate charged to customers, rather than the wholesale rate paid to hotels. Hoteliers should ensure that OTCs are complying with this new requirement to avoid any potential inaccuracies in tax collection.

3. Additionally, it is essential for hoteliers in North Carolina to stay updated on any further changes or updates to hotel tax laws at the state and local levels. Keeping informed about these regulations is crucial to ensuring compliance and avoiding any penalties or fines for non-compliance.

Overall, staying knowledgeable about the latest developments in hotel tax laws is vital for hoteliers in North Carolina to maintain compliance and effectively manage their tax obligations.

14. Do hotel reservations made through third-party booking platforms impact the hotel tax collection process in North Carolina?

Yes, hotel reservations made through third-party booking platforms can impact the hotel tax collection process in North Carolina in several ways:

1. Allocation of tax revenue: When guests book through third-party platforms, the platform may collect the payment from the guest and remit the taxes to the hotel on their behalf. This can create challenges in accurately allocating and distributing tax revenue among different jurisdictions, especially if the third-party platform is based outside of North Carolina.

2. Compliance and reporting: Hotel operators are still responsible for ensuring that the correct amount of occupancy tax is collected and remitted to the appropriate authorities. They must reconcile the taxes collected by third-party platforms with their own records to ensure compliance with North Carolina’s hotel tax laws.

3. Tax exemptions and deductions: Third-party platforms may apply different tax rates or exemptions based on their own interpretation of the law, which could lead to discrepancies in the amount of tax collected and remitted. Hotel operators need to closely monitor these transactions to ensure they are properly accounted for.

Overall, hotel reservations made through third-party booking platforms can add complexity to the hotel tax collection process in North Carolina and require careful management to ensure compliance with the applicable laws and regulations.

15. How does the state track and audit hotel tax compliance among properties in North Carolina?

In North Carolina, the Department of Revenue is responsible for overseeing hotel tax compliance among properties in the state. They track and audit hotel tax compliance through various methods:

1. Registration: Hotels and other lodging establishments are required to register with the Department of Revenue and obtain a Certificate of Registration for Sales and Use Tax purposes. This registration process helps the state track which properties are subject to hotel tax obligations.

2. Reporting: Hotels are required to regularly report their room occupancy tax collections to the state. These reports help the Department of Revenue keep track of the taxes collected by each property.

3. Audits: The Department of Revenue conducts periodic audits of hotels and lodging establishments to ensure compliance with hotel tax laws. During these audits, the state may review financial records, occupancy reports, and other relevant documentation to verify that the correct amount of taxes has been collected and remitted.

4. Technology: The state may also use technology and data analytics to monitor hotel tax compliance. This can include analyzing booking information, online listings, and other sources of data to identify properties that may be underreporting or failing to collect the required taxes.

Overall, the state of North Carolina tracks and audits hotel tax compliance through a combination of registration requirements, regular reporting, audits, and technology-driven monitoring to ensure that properties are adhering to the state’s hotel tax laws.

16. Are there any resources or assistance available to help hotels understand and comply with the hotel tax laws in North Carolina?

Yes, there are resources and assistance available to help hotels understand and comply with hotel tax laws in North Carolina. Here are some key points to consider:

1. State Department of Revenue: The North Carolina Department of Revenue (NCDOR) is the primary authority responsible for administering and enforcing hotel tax laws in the state. They provide guidance, resources, and publications to help hotels navigate the complexities of tax compliance.

2. Online Resources: The NCDOR website offers a wealth of information on hotel tax laws, including FAQs, forms, instructions, and publications. Hotels can access this online portal to find answers to their specific tax-related questions.

3. Consultation Services: Hotels can also seek assistance from tax professionals or consultants who specialize in hotel tax laws. These experts can provide tailored advice and support to ensure hotels are compliant with the relevant regulations.

4. Seminars and Workshops: The NCDOR occasionally organizes seminars and workshops to help educate hotels on tax laws and compliance requirements. Hotels can participate in these events to enhance their understanding of the rules and regulations.

By utilizing these resources and seeking expert guidance, hotels in North Carolina can better understand and comply with hotel tax laws, avoid potential penalties, and ensure smooth operations in accordance with state regulations.

17. Can hotels pass on the cost of the hotel tax to guests, or must it be included in the advertised room rate?

1. In general, hotels have the flexibility to handle hotel tax charges in different ways. However, the specific regulations regarding whether hotel taxes can be passed on to guests or must be included in the advertised room rate vary by jurisdiction. It is essential for hotel owners and operators to understand the local laws and regulations related to hotel tax and occupancy tax requirements in the area where the hotel is located.

2. Some jurisdictions require hotels to include the hotel tax in the advertised room rate that is presented to guests. This means that the rate displayed to potential guests must already account for the hotel tax, and guests should not be presented with an additional charge for the tax upon checkout.

3. On the other hand, in some areas, hotels may choose to separately itemize the hotel tax on the guest’s bill, effectively passing the cost of the tax on to the guest. In such cases, hotels need to ensure that they are transparent about these charges and properly disclose the additional tax amounts to guests.

4. It is important for hotels to comply with the specific laws and regulations governing hotel taxes in their jurisdiction to avoid any potential legal issues or penalties. Hotel operators should consult with legal advisors or tax professionals to ensure compliance with the applicable hotel tax laws and regulations.

18. How does North Carolina define what constitutes a “hotel” for the purposes of the hotel tax law?

In North Carolina, the state defines a “hotel” for the purposes of the hotel tax law as any place offering sleeping accommodations to the public for a charge. This includes establishments such as hotels, motels, inns, tourist camps, tourist homes, rooming houses, and similar lodging facilities. To be subject to the hotel tax, the establishment must provide at least one of the following services: housekeeping, maid, or linen services, furnishing of laundry services, telephone, or similar services commonly provided to transients. It’s important to note that the definition of a hotel may vary slightly depending on the specific ordinances or regulations set forth by each individual municipality or county within North Carolina.

19. Are there any specific regulations or requirements for hotels that offer package deals or all-inclusive stays in North Carolina?

Yes, there are specific regulations and requirements for hotels offering package deals or all-inclusive stays in North Carolina. Some key points to consider include:

1. Hotel Occupancy Tax: Hotels in North Carolina are required to collect a hotel occupancy tax from guests who stay for less than 90 consecutive days. This tax applies to the total amount paid for accommodations, including package deals and all-inclusive stays.

2. Transparency in Pricing: Hotels must ensure that the prices for package deals or all-inclusive stays are clearly communicated to guests, including any additional fees or charges that may apply. It is important to provide a breakdown of the cost and services included in the package to avoid any misunderstandings.

3. Compliance with State Laws: Hotels offering package deals or all-inclusive stays must comply with all state laws and regulations, including those related to advertising, consumer protection, and fair trade practices.

4. Licensing and Permits: Hotels in North Carolina must have the necessary licenses and permits to operate, especially if they are offering additional services or amenities as part of a package deal. It is important to ensure that the hotel is in compliance with all licensing requirements.

5. Record-Keeping: Hotels should maintain accurate records of all package deals and all-inclusive stays, including details of the services provided, pricing information, and any applicable taxes collected. This information may be requested during audits or inspections by regulatory authorities.

Overall, hotels offering package deals or all-inclusive stays in North Carolina must adhere to the relevant regulations to ensure compliance and provide a positive experience for guests.

20. What steps should a hotel take if they believe they have been incorrectly assessed for hotel taxes in North Carolina?

If a hotel in North Carolina believes they have been incorrectly assessed for hotel taxes, there are several steps they should take to address the issue:

1. Review the assessment: The hotel should carefully review the tax assessment they received to understand why they believe it is incorrect. They should verify the calculations, check for any errors or discrepancies, and ensure that all relevant exemptions or deductions have been applied correctly.

2. Gather evidence: The hotel should gather all relevant documents and evidence to support their claim that the assessment is incorrect. This may include sales records, occupancy reports, and any other documentation that can help to demonstrate the accurate tax liability.

3. Contact the tax authority: The hotel should reach out to the North Carolina Department of Revenue or the local tax authority that issued the assessment to discuss the issue. They should provide their evidence and reasoning for why they believe the assessment is incorrect.

4. Request a review or appeal: If the hotel is unable to resolve the issue informally with the tax authority, they may need to formally request a review or appeal of the assessment. This process will involve submitting additional documentation and arguments to support their case.

5. Seek legal advice: If the hotel is unable to resolve the dispute on their own, they may need to seek legal advice from a tax attorney or consultant who specializes in hotel tax laws in North Carolina. They can provide guidance on the best course of action and represent the hotel in any formal proceedings.

Overall, it is important for hotels to be proactive in addressing incorrect tax assessments to ensure they are complying with the law and not overpaying taxes.