Transient Occupancy Tax
The TOT rate is 12%.
10% is unrestricted revenue and 2% is restricted to Creeks Restoration and Water Quality Improvement (Measure B).
These fees are paid monthly. Payment is due on or before the tenth day after the close of each month. (If the tenth of the month falls on a Saturday, Sunday or holiday, the next business day becomes the due date. Postmarks are acceptable, but not imprint dates from postage meters.)
A penalty of 10% will be added starting the day after the due date. If delinquent more than 30 days, an additional 10% penalty will be added plus interest at the rate of ½ of 1% per month.
For further assistance please feel free to contact Finance staff.
· Hotel/Motel Operator’s TOT Information (PDF 83KB)
· Transient Occupancy Tax Monthly Notice Form (PDF 48KB)
· Exemption Claim Form (PDF 69KB)
· TOT Registration Form (PDF 83KB)
· Business License Tax Application
· Municipal Code 4.08 (PDF 418KB)
(Go to page 4 in the document.)
What is Transient Occupancy Tax (TOT)
The "TOT" is a Tax imposed on "Transient" guests for the privilege of staying in any hotel, inn, motel or other commercial lodging establishment for lodging or sleeping purposes for a period of less than 30 days. These taxes are collected by the hotel/motel operator for the City and are forwarded to the City on a monthly basis.
Frequently Asked Questions about TOT
Commercial Lodging Establishments
For ease, we will refer to any commercial lodging establishment as "hotel." But, a commercial lodging establishment may be anything from a large hotel to a short-term rental property. For further definition see Municipal Code.
Who is Considered a "Transient" Guest?
Any person who stays in your hotel for a period of 30 consecutive calendar days is considered a Transient Guest and is subject to paying TOTs. Any person occupying space in a hotel shall be considered as a transient guest until the period of 31 days, an agreement in writing between the operator and the occupant should be provided reflecting intent to occupy for 31 consecutive days.
Why Does the City Impose this Tax on Our Guests?
Taxes, of course, keep the City running by providing essential public safety, repair and maintenance to roads and public facilities, and general improvements to the community. The taxes collected from our transient guests are deposited, along with other City revenue, in the City's general fund for general governmental purposes, including community improvements as determined by the City Council from time to time. These improvements greatly contribute to our City's desirability and encourage future tourism in our community.
How is the TOT Calculated?
All taxable rent charged our guests for lodging purposes is taxed according to the rate established in the Code. Currently, our tax rate is twelve percent (12%) of the taxable rent charged. 10% is unrestricted revenue and 2% is restricted to Creeks Restoration and Water Quality Improvement (Measure B).
What is Considered Taxable Rent?
Any amount identified as "rent" on a guest's receipt is subject to TOT with no later deduction or reclassification of non-rent items permitted whatsoever. The following is a list of common guest charges to use as a guide to help determine what is considered taxable rent:
Subject to TOT
- Any amount reflected as "rent" on the guest's receipt.
- Basic room charge.
- Charges for equipment (i.e. roll-away beds, cribs, television sets, etc.).
- In-room services (i.e. cost of movies provided through a TV cable channel or any other service not subject to California Sales Tax).
- Forfeited deposits and/or cancellation charges.
Not Subject to TOT
- Items subject to California Sales Tax (i.e. taxable meals, etc. which have been listed separately on the guest's receipt).
- Non-rent items (i.e. phone charges, valet service, parking fees, golf, tennis, etc., which have been listed separately on the guest's receipt).
The Hotel Operator, Duties, Due Date Penalties and Exceptions
If non-rent items, such as meals, golf, tennis, etc., have been included in a hotel package or as complimentary items, their cost should not be included in rent, but should be itemized separately on the guest's receipt for proper calculation of the TOT.
Duties of the Hotel Operator
As the operator of a commercial lodging establishment and pursuant to the Municipal Code, you are responsible to:
1) Register the hotel with the City's Finance Department no later than 30 days after the start of business. Complete the registration form, along with City Business License application.
2) Collect the Tax from each guest at the time the rent is paid. A receipt, showing payment of the TOT must be provided to each paying guest. An operator may not advertise or suggest that the tax will not be added to the rent, will be absorbed by the operator, or will be refunded (except as provided in the Code).
3) Preserve all hotel tax records which are necessary in the tax collector's judgment to determine the amount of the tax charged for a minimum of three years.
When Should an Operator Collect the TOT?
The hotel operator shall collect the tax from the guest at the time the rent is collected. If rent is paid in installments, a proportionate share of the taxes should also be collected.
How Should an Operator Account for TOT?
All taxes collected by the hotel operator must be held in a trust account. This account is used to separately identify money which belongs to the City but which has been temporarily entrusted with the operator until payment is forwarded to the tax collector.
When are the Due Dates for Filing a Return and Paying the Tax?
All registered hotel operators in the City will receive Monthly Notices by mail. The return will allow operators to declare total room rents charged and received, and taxes collected from guests. The operator must pay the full amount of TOTs recorded for the month, whether or not it has been collected from the guest, at the same time the return is filed.
Payment is due on or before the tenth day after the close of each month. (If the tenth of the month falls on a Saturday, Sunday or holiday, the next business day becomes the due date. Postmarks are acceptable, but not imprint dates from postage meters.)
What if the Lodging Business Closes?
Should the business cease to operate for any reason, notify the City Finance Department. You must then file a final return and pay any taxes due immediately.
What if an Operator Files the Tax Late?
If the tax return and payment is received by the City post-marked after the due date, penalty and interest charges shall be assessed beginning on the first day the tax becomes delinquent.
The penalty is equal to ten percent of the amount of the tax, plus the tax itself.
How can Late Penalties be Avoided?
No penalty will be added if a return is:
1) Received in the Finance Office on or before the due date, by the end of business day; or
2) Postmarked by U.S. Post Office cancellation mark by midnight on the due date (metered post marks are not acceptable).
Those who are exempt from paying TOT are as follows:
*Review claim form for refund information required
1) Any federal officer or employee on official business;
2) Any officer or employee of a foreign government who is exempt by a provision of the federal law or international treaty;
3) Any Red Cross, Amtrak, US Postal Service, Federal Credit Union and Insurance Company employee serving on official government business (i.e. earthquake emergency response, etc.)