Several municipalities across Pennsylvania have recently considered new proposed ordinances for homeowners operating in the short-term rental industry. These proposed ordinances seek to create new requirements for homeowners, such as providing a copy of their Pennsylvania Sales, Use, and Hotel Occupancy Tax license as part of the short-term rental applications they are required to submit to the municipality.
The Department of Revenue is reminding municipal officials that third-party booking agents often collect state and local taxes on behalf of their hosts. That means that many homeowners active in the short-term rental industry are not required by law to obtain a Sales, Use, and Hotel Occupancy Tax license from the Department of Revenue. The department will not issue a license when it is not required.
Here is the general rule: a private homeowner who exclusively (100%) uses a third-party booking agent to rent their home does not need to have a separate license. The booking agent is required to collect and remit state and local taxes if it is acting on behalf of the homeowner.
In other situations where private homeowners are renting out their houses for a period of less than 30 days and are making bookings directly with customers without a booking agent, those homeowners are required to obtain a license from the Department.
Municipalities are encouraged to keep these legal requirements in mind as they consider ordinances that create new requirements for short-term rental operators. The Department of Revenue is working with various organizations to provide information on the existing laws and requirements that apply to homeowners operating in this industry.
Please contact Katharine S. Paisley, Policy Director for the PA Department of Revenue, at kapaisley@pa.gov with any questions.