San Rafael, CA – In Marin County, the rapid rise of online vacation rental platforms has led to an increase in the number of homeowners who offer their homes as short-term rentals. As a result, the Marin County Department of Finance rolled out several program initiatives in 2018 geared toward improving business license and transient occupancy tax (TOT) compliance in the unincorporated areas of the Marin.
The Department of Finance has made it more convenient for people to pay for business license renewals and transient occupancy taxes.
Web-based services for TOT and business license are available through a new online portal and are saving a lot of time and resources for the County and its constituents, according to a one-year review of the programs.
TOT operators in the unincorporated areas of Marin are now filing their monthly TOT returns electronically. The shift to paperless reporting has not only reduced printing and postage costs but has led to fewer tax computation errors, increased efficiencies and better communication with operators.
Business license renewals are due annually by July 31. This year the online renewal option prompted more businesses to renew their business licenses on time. The ability to send bulk email reminders to businesses with expired business licenses also resulted in an 80% reduction in prior-year business license delinquencies.
The Marin County Board of Supervisors adopted a short-term rental ordinance in 2018, that requires short-term rental operators to notify neighbors either in writing or through signage on the property. Operators can now submit an Affidavit of Public Notification or request the appropriate signage through the online business license renewal process.
The implementation of online processes for business license and TOT was a key action item in Finance’s five-year strategic plan, which seeks to provide enhanced public service through innovation and transparency.
“They have improved client services for greater flexibility and convenience,” said Finance Director Roy Given. “The online portal has saved time and resources while making the reporting and payment process smoother and user-friendly to the business operator. It has also been a popular way to connect people to one-on-one assistance with our staff.”
In October 2018, Department of Finance had about 345 active transient occupancy tax registrations, as of today there are 837. Finance staff invited more than 800 operators to several public workshops aimed at helping them register their properties and answering questions about TOT. These workshops were especially useful for West Marin operators, where voters approved Measure W authorizing a 4% tax rate increase effective January 1, 2019.
The County enlisted Host Compliance to monitor online platform activity and to identify non-compliant short-term rental operators. A series of letters outlining TOT operator responsibilities was sent to 561 non-compliant operators. The County sought voluntary program compliance and achieved a 97% response rate for TOT and Business License registration and recovered three years of back taxes as required per the respective ordinances.
“We’ve made a concerted effort to provide appropriate notification and warning to operators to avoid advanced collection processes, including legal action,” Given said. “We’re taking these steps in fairness to all the other short-term rental operators who have complied with the local ordinance. We thank all those who have registered their properties and are paying TOT on a monthly basis.”
The TOT increase approved by Measure W will provide increased funding for fire/emergency services and long-term community housing. The Marin County Community Development Agency (CDA) administers Measure W community housing funds. The measure allows for an ad-hoc working group to help inform CDA’s recommendations to the Marin County Board of Supervisors. Measure W generated about $1.5 million in revenue in 2019.
“TOT revenue is very important for local communities,” Given said. “By sending communications to noncompliant operators, we hope to increase the community’s awareness of their responsibilities and the availability of our department’s services.”
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