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).
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 January 1, 2019
Based on feedback received regarding the 2% increase in the Transient Occupancy Tax (TOT) that became effective on January 1, 2019, the City of Sonoma would like to provide the following clarifications regarding room rentals in January:
- Bookings Paid Directly to Hotel Prior to January 1, 2019: Guests who pre-paid for their rooms for the entirety of their stay DIRECTLY to the property ownership prior to January 1, 2019, should be assessed the 10% TOT rate. Property owners will be responsible for submitting two separate returns, (a 10% TOT return and a 12 % TOT return), for those months where they have guests who paid the former 10% rate and guests who have paid the new 12% rate in order to correctly report how many room nights were rented at the applicable rates.
- Bookings Made But Not Paid Prior to January 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 January 1, 2019, should be assessed the 12% TOT rate.
- Bookings Made With Online Travel Companies Prior to January 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 January 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 January 1, 2019, would have the 12% 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 January 1, 2019, should be assessed the 10% rate while payments made from January 1, 2019, should be assessed the 12% rate.
- Stays That Cross Calendar Years: Guests whose stays included nights in both 2018 and 2019 would be assessed the rate in effect at the time they paid for their rooms. For example, a guest whose stay was from December 30, 2018, through January 4, 2019, and paid for the room on January 4, 2019, would be assessed the 12% rate for the entire room rental as the TOT is assessed at the time of payment.
Questions? Contact Ryan Kodama, Accounting Technician.