Citrus Heights seeks to enforce 12% tax on AirBnB’s, launches online portal

By Sara Beth Williams–
The City of Citrus Heights says less than 30 percent of identified AirBnB’s and other short-term rentals in Citrus Heights are currently in compliance with city licensing and tax requirements.

In an effort to increase compliance, the city recently implemented a new online payment platform. According to the city’s website, the city began requiring all short-term rental locations to hold a business license in May 2022. The Business License for a short-term rental is $108 for the first year and is renewed annually. Applications for licenses can be submitted online through the city’s Business License Portal.

A short-term rental is defined as a residential dwelling, or part of a dwelling, that is rented out on a short-term basis for less than 30 days, such as a dwelling that is rented out on online vacation platforms like AirBnb or VRBO. Short-term rentals can include entire homes or apartments, private spaces within a home, or shared spaces within a home.

Transient Occupancy Taxes, or TOT, are commonly referred to as the “bed tax” and are also required by state regulation to be paid by operators of short-term rentals. Any accommodations where occupancy exceeds 30 days is exempt from TOT fees.

The city requires a 12 percent TOT rate of the rent charged to guests, based on the total revenue for the quarter. Revenue includes such fees as a nightly rate, late or early arrival charge, pet fee, cleaning fee and similar fees, but does not include refundable deposits.

Rather than being absorbed by the operator, TOT fees are collected by the owner from guests at the same time rent is collected. TOT payments are required to be paid by operators of applicable dwellings or businesses to the city quarterly.

“The implementation of this online platform represents the first step towards achieving greater compliance among STR operators,” the city said in an announcement last month, adding that “in the coming weeks,” city staff would be working proactively with non-complaint operators to address TOT remittance and licensing compliance.

The city’s online payment portal will ask for the total revenue for the period and automatically calculate the TOT amount due. TOT payments can also be mailed in using the TOT payment form found on the city’s website.