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What is TOT?
Transient Occupancy Tax (TOT) is a tax imposed on visitors occupying a room in a hotel, motel, inn, or similar establishment.
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Who owes the transient occupancy tax?
The tax is imposed on persons staying thirty (30) consecutive days or less in a hotel, motel, inn, or similar establishment.
The tax must be charged to the guest and may not be absorbed by the hotel. However, if the operator willfully or negligently fails to collect the tax, the operator is responsible for payment to the City.
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How is TOT calculated?
The amount of tax due is ten percent (10%) of room rents received in the applicable reporting period.
Taxable Rent
TOT is due on all fees and charges necessary, or mandatory, for occupancy of a room. Non-rent items are not subject to TOT, but must be listed separately on the guest's receipt and in the hotel operator’s records in order to be exempt from TOT.
Following is a list of common guest charges subject to TOT:
- Basic room charge
- Charges for equipment (roll-away bed, crib, ect.)
- Mandatory fees (i.e. extra person fees, pet in room fees, late check-out fees, resort fees, reservation fees, forfeited deposits, ect.)
- Trade in lieu of rent (i.e. occupancy paid for with an exchange of goods, labor, ect.)
Following is a list of common guest charges not subject to TOT:
- Parking or valet charges
- Food products and beverages subject to California Sales and Use Tax
- Other non-rent items such as phone calls, internet connection fees, etc.
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Can I include the TOT in my stated room rate?
No, Transient Occupancy Tax must be charged and tracked separately from the stated room rate.
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Who collects the TOT?
The amount of tax is stated separately from the room charge and the hotel operator collects the tax at the same time the room charge is collected.
By completing the quarterly TOT return, the hotel operator determines the amount of tax due. The hotel operator then mails the completed TOT return and payment to the City.
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How are TOT exemptions for qualified Government employees made?
An officer or employee of the Federal or State of California government is exempt from paying TOT when on official business. Additionally, no tax will be imposed upon an officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty when on official business.
The exemption must be made at the time rent is collected. The Government Agency Exemption Claim Form (Link / Web Address) is required for all qualified governmental exemptions and must be filled out entirely and legibly for the exemption to be valid. The hotel operator is responsible for verifying the claimant’s ID, the claimant’s government employment, and that the claimant is on official business.
The original form, along with the appropriate documentation, must be kept on file with the hotel for a period of three years after the tax return is filed and is subject to inspection. Submit a copy of the completed form with your tax return.
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What forms of verification are recommended for proof of exemption for a government employee from TOT (i.e. proof that they are on official business)?
Forms of proof include:
- The official travel orders indicating the issuing governmental agency and the person’s full name. The dates of occupancy must also be included.
- A letter on the official letterhead of an exempt governmental agency requesting exemption and listing the employee’s name and stating that the stay is for official governmental business. The dates of occupancy must also be included.
- The warrant or check drawn on the Treasury of the United States or the State of California being used to pay for the occupancy.
- A government credit card issued by his or her employer to pay for the occupancy.
Retain a copy of the claimant’s proof along with the original exemption form.
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Are government contractors exempt from paying TOT?
No, a contractor for a government agency is not exempt from TOT.
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What does the City do with the TOT revenues?
The taxes collected are deposited in the City’s general fund and are used for general operating expenses incurred by the City or for capital improvements or such other legal uses and purposes as determined by the City Council.
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Can I deduct my business expenses from my room rentals in determining the amount of TOT due?
No. The hotel’s business expenses are not deductable from taxable room rentals in determining the amount of tax due.
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How long should I maintain my TOT related records?
Operators of lodging facilities are required to keep and preserve records for a period of three (3) years, including all records that may be necessary to determine the amount of tax due in the event of an audit.
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What if I don't remit my tax return and tax remittance on time?
Penalties for original delinquencies, continued delinquencies, or fraud will be assessed. In addition to the penalties imposed, interest will be charged. Refer to Municipal Code Section 5-25.080 for specific information.
If any operator fails to collect and report the tax the City's Tax Administrator shall proceed in such manner as he may deem best to obtain facts and information on which to base his estimate of the tax due. Refer to Municipal Code Section 5-25.090 for specific information.
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Who can I call to ask other questions about TOT?
The Tax Administrator is the Finance and Administrative Services Director for the City of Saratoga. You may reach the Tax Administrator at 408-868-1221.
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