California Transient Occupancy Tax Laws

by Cheryl Frazier - Updated September 26, 2017
California levying bodies may levy a transient occupancy tax for hotel stays of less than 31 days.

The California State Controller’s Office describes a transient occupant as anyone who enters into an agreement to stay in a hotel room for 30 consecutive days or less. California requires the payment of a transient occupancy tax under such circumstances. In 2003, the Agua Caliente Band of Cahuilla Indians came to realize that not even their sovereign status could deter the collection of California’s transient occupancy tax.

Levying Bodies

California Revenue and Taxation Code Section 7280 permits California municipalities and counties to levy a transient occupancy tax for properties within their jurisdiction. Some properties may refer to the transient occupancy tax as a bed tax, hotel tax or TOT. A covered property is required to charge this tax to any guest who stays on the property for fewer than 31 days. The covered property must remit the collected amounts to the levying body. A county government may only levy the occupancy tax in its unincorporated areas.

Covered Properties

Guests who pay to stay in hotels, motels and inns are subject to the transient occupancy tax. Guests who chose to stay in a hostel or tourist house are also subject to the transient occupancy tax. Hostels offer dormitory-like accommodations, and tourist houses offer accommodations in a private, homelike setting. A visitor who parks his recreational vehicle or mobile home in a nonexempt recreational vehicle park or campground space will find that he is also subject to the transient occupancy tax.

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Exempt Properties

The accommodations of a membership campground or a time-share property are exempt from the transient occupancy tax when the guest is an owner or a nonpaying guest of an owner. Local governments may not impose a transient occupancy tax upon a recreational vehicle park or mobile home campsite that is located in a state park. Camping facilities run by a county or municipality are exempt as well.

Exempt Guest

Any guest who stays at a covered property for more than 30 days changes from the status of a transient occupant to that of a hotel resident, and he is no longer subject to the transient occupancy tax. Some levying bodies, such as the County of Los Angeles, will allow guests to designate their stay as exempt within the first 30 days. This is done by submitting an over-30-day exemption application form prior to the end of the first 30 days. The property operator must show his agreement by signing off on the over-30-day exemption application.

Government Employees

Each levying body has the right to exempt government workers who are traveling on official business. This includes employees of the federal government and its instrumentalities -- such as Amtrak or the American Red Cross, state or local government employees and foreign government employees. The government employee must present photo identification, proof of his status as a government employee and proof of the purpose for his stay. Acceptable travel support documents include his governmental travel orders, a check issued by the government employer for payment of the accommodations or use of the government employer’s credit card as payment.

Change in Ownership

A pending buyer has the right to request a tax clearance certificate from the covered property’s tax levying body. The certificate provides the amount of transient occupancy tax that is due and unpaid. If the seller does not resolve the unpaid balance prior to the close of the sale, the buyer may have the escrow instructions modified to set aside a portion of the purchase amount to satisfy the seller’s outstanding transient occupancy tax liability.

About the Author

Cheryl Frazier is a freelance writer with more than 12 years of business analysis and technical writing experience. She attended the University of California, Irvine and Pepperdine University and has provided business analysis consulting and technical knowledge content to such industries as construction, entertainment, health care, retail and technology.

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