Editorial: County To Audit Rentals For Room Tax Compliance

By / Editorials / Wednesday, 21 March 2018 18:17

Managing Editor

The New Hanover County Board of Commissioners unanimously approved spending $41,000 dollars during their March 12th, meeting to hire a company to audit local properties being rented through online services like AirBNB as short term rentals. (Click here to see report on page 1-A)

The purpose is to track how many property owners are renting accommodations through online services and whether or not they are paying the County's Room Occupancy Tax the same as hotels, motels and other short term vacation rental accommodations.

This is an excellent move by the Board of Commissioners to address a long standing issue of people not paying their fair share of taxes.

Short term accommodations such as hotels, motels, bed and breakfasts  must pay a room occupancy tax. Those taxes go to fund beach nourishment projects as well as tourism related expenditures and promotion. The Room Occupancy Tax Rate for Kure Beach is 6% and the combined State and County Sales Tax Rate is 7% for a total of 13% on a vacationer's bill. For example, a portion of the ROT goes toward funding beach nourishment projects which in turn helps maintain wide beaches for both locals and tourists to enjoy. But not just for the recreational aspect. More importantly, to maintain a buffer from the power of the Atlantic Ocean which can ultimately threaten oceanfront property values of both residential and commercial ventures such as hotels, motels and vacation rental homes.

The ROT is also used to fund a portion of the annual budget for the local municipal life guard programs to protect lives of people who enjoy the beach. It's an added level of safety for both locals and visitors.

There is an economic revenue generating engine built into the ROT tax legislation.

A portion of the revenues generated by the ROT are used to promote the Town as a tourism destination and another portion is used to cover tourism related expenditures like festivals and other events that put more heads on beds in rental accommodations. That part of the legislation serves to fund activities that help increase the number of people that visit the area and in turn increases ROT revenues.

Not collecting the tax is a violation of law. If you're one of those owners not collecting that tax, you're not doing your part to help improve the community and the very tourism based economy your rely on to make your property attractive to vacationers.

In 2016, the Town of Kure Beach researched online rental sites and drove around Town looking for "Rental" signs. They identified 241 rental properties. The County Tax Office said at the time the Town had 98 open accounts for ROT collection.

The Town estimated that increased collections from non-reporting properties could double ROT collections annually from $880,000 to $1.6 million.


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