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How To Get Lodging Tax Penalties WaivedYou've owned your vacation property for months or years and you've just realized that you should have been paying sales and lodging tax on all of the rent that you've been collecting. You've reported all of your rental income on your state and federal income tax returns and thought that this was your only tax obligation. Now you know that it wasn't your only obligation and you fear that the taxes, penalties and interest you owe may be substantial. The bad news is that you do owe the tax; the good news is that you may be able to get the penalties waived. Most state revenue agencies have programs whereby they will agree to waive the penalties if you voluntarily report the prior period revenue and pay the tax. Penalties vary by jurisdiction, but a taxing authority will typically impose an annual penalty of 10% to 25% of the tax due. Even if there was no tax due in a period, most jurisdictions will enforce a minimum penalty on each return that was not filed. Minimum penalties can be as much as $50 per late return and many returns are due monthly. Unfortunately, most tax jurisdictions do not have the authority to waive the interest in any situation, but the interest is usually minimal compared to the penalties and tax due. Interest rates are typically in the 7% to 10% range. To take advantage of these programs, it is imperative that you contact the taxing authority before they contact you. If an enforcement agent contacts you first, he/she will probably not waive any of the penalties. Enforcement officials routinely review the vacation listing web sites in search of rental properties that are not collecting and remitting sales and lodging taxes. If you are contacted by an enforcement official, don't avoid him/her; address the issue immediately. Tax agencies can and will put a lien on a property for unpaid taxes. Many tax authorities recommend that you present your case and negotiate a settlement anonymously through a Certified Public Accountant (CPA). Utilizing the CPA that prepares your federal and state income taxes can be expensive and most CPAs that specialize in state and federal income taxes are not familiar with sales and lodging taxes. Most have never negotiated a sales and lodging tax settlement. HotSpot Tax Services, a company that specialized in sales and lodging tax compliance for vacation homeowners, has an affordable solution for homeowners who find themselves in this situation. Through this program, HotSpot will work with state and local tax officials to voluntarily report your revenue and negotiate a settlement for as little as $100 per property. Call HotSpot today at 877-589-0207 for a confidential conversation regarding voluntary compliance programs in your area. HotSpot also offers an affordable monthly sales and lodging tax filing service so that you'll never get behind in filing your taxes again. Visit HotSpot's website at www.hotspottax.com for more information on these and other vacation rental related services. ©2003 HotSpot Tax Services, LLC. All Rights Reserved. |
