Transient Occupancy Tax (TOT)

The transient occupancy tax (or TOT), is also commonly known as a hotel tax.  The tax is imposed on occupants of hotels, inns, and other short-term lodging facilities for stays of 30 days or less. The tax is applied to a customer’s lodging bill. Transient occupancy taxes are remitted for all approved lodging operators within the City of Sonoma. The TOT is a general tax which is deposited into the City’s General Fund.

TOT generated from Sonoma’s lodging community currently represents more than one-fifth of the City’s General Fund revenue. The General Fund pays for essential City services that benefit both residents and visitors.  These include police protection, fire and paramedic services, emergency preparedness, maintenance of streets and traffic operations, recreation services, maintenance of parks and open space, maintenance of City buildings and facilities, improvements and maintenance of overall City infrastructure and property, and general municipal services to the public. Learn more about the City’s finances in the overview section (Part I) of the City’s budget.

In November 2018 mid-term election, voters approved Measure S, the Transient Occupancy Tax increase. Measure S increases the TOT rate from the existing 10% to 12% effective January 1, 2019 and authorizes the City Council to further increase the rate to 13% within the next five years (by January 1, 2024).

2% TOT Increase Effective 1/1/2019 – Implemented.

1% TOT Increase Effective 9/1/2019 – In Process

On June 10, 2019, the City Council held a discussion about increasing the remaining 1% of the TOT ordinance to address the City’s affordable housing situation.  After discussion, the City Council approved a resolution authorizing an additional 1% increase in the TOT, effective September 1, 2019.

Affordable workforce housing in the City of Sonoma is becoming a challenge and the City is making addressing the issue a priority as evidenced by the recent “Housing Our Community” Town Hall series, a community education and engagement program focused on housing solutions.  The additional 1% TOT increase will help fund affordable housing initiatives for Fiscal Years 2019-2020, 2020-2021 and 2021-2022, with a review by the City Council prior to June 20, 2021.

Currently, lodging operators in the City of Sonoma collect both a 12% TOT which is general city tax revenue and an additional 2% assessment that is remitted to the Sonoma Tourism Improvement District (STID) as a funding source for a sustained marketing program with the goal of increasing occupancy and room revenues in the City of Sonoma. The current combined TOT and STID collection rate is 14%.

Beginning September 1, 2019, the TOT collection will increase to 13% while the STID rate will remain at 2%.  The updated combined TOT and STID collection rate will therefore be 15%.  All room bookings will be subject to the increase, even if the reservation was made prior to September 1, 2019.  Room rentals for stays on or after September 1, 2019, but paid in full by August 31, 2019, will be exempt from the increased rate and will be assessed the current 12% TOT.

Transient Occupancy Tax and Tourism Improvement District Assessment

In addition to TOT, a 2% Tourism Improvement District (TID) assessment is added to all overnight stays in the City limits (hotels, motels, B&Bs, guest houses and vacation rentals).   The City has grandfathered some current vacation rentals, but other than those previously approved, vacation rentals are not allowed within the city of Sonoma.

Property managers are responsible for collecting, reporting, and paying TOT and TID each calendar month to the ity of Sonoma.  Click on the links below to download the appropriate TOT and TID Monthly  form.

 

FAQ's Regarding the TOT Increase Effective September 1, 2019

Based on feedback and questions received, the City of Sonoma would like to provide the following clarifications regarding room rentals in September:

  • Bookings Paid Directly to Hotel Prior to September 1, 2019: Guests who pre-paid for their rooms for the entirety of their stay DIRECTLY to the property ownership prior to September 1, 2019, should be assessed the 12% TOT rate.  Property owners will be responsible for submitting two separate returns, (a 12% TOT return and a 13% TOT return), for those months where they have guests who paid the former 12% rate and guests who have paid the new 13% rate in order to correctly report how many room nights were rented at the applicable rates.
  • Bookings Made But Not Paid Prior to September 1, 2019: Guests who reserved but did not pay for their rooms or only paid for a portion of their stay (i.e., first-night deposit) prior to September 1, 2019, should be assessed the 13% TOT rate.
  • Bookings Made With Online Travel Companies Prior to September 1, 2019: The TOT rate for guests who reserved and paid for their rooms via a third-party website/online travel company (i.e., Expedia, Hotels.com, etc.) prior to September 1, 2019, will be determined by the contract the property ownership has in force with the online travel company.  If the guests paid the online travel company directly for the entirety of their stay, the rate would be determined by the date the property ownership bills the online company for the guests’ stay.  Bills dated from September 1, 2019, would have the 13% TOT rate.  Guests who book a room via an online company, but still pay the hotel directly, would be responsible to pay the TOT rate applicable at the time the payment is made, for the entirety of their stay.  Payments made prior to September 1, 2019, should be assessed the 12% rate while payments made from September 1, 2019, should be assessed the 13% rate.

Questions? Contact Ryan Kodama, Accounting Technician (707) 933-2236.

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