In a nightly-rental resort property, is the property owner or the property manager legally responsible for collecting and remitting sales tax, transient room tax, and resort communities tax?

Plain-English summary

The state agency that licenses and regulates property managers — including those handling nightly rentals in Utah's resort areas — asked the Tax Commission a foundational compliance question while drafting new rules on how property managers must handle rental funds: is it the property owner or the property manager who's responsible for collecting, accounting for, and remitting sales tax, transient room tax, and resort communities tax on nightly rentals?

The Commission's answer split by tax type and, for sales tax, turned on the specific contractual relationship:

Sales tax. Short-term lodging (stays under 30 consecutive days) is subject to Utah sales tax under § 59-12-103(1)(k). While sales tax is legally a tax on the purchaser (the guest), the collection and remittance duty falls on whoever is the "vendor" — defined as the person receiving payment for the taxable rental. Whether that's the owner or the property manager depends entirely on their contract: if the property manager contracts to receive rental payments on the owner's behalf, the manager is the vendor and must get a sales tax license and comply with the collection/remittance rules in § 59-12-107.

Resort communities tax. This is an additional local sales tax a qualifying resort community may layer onto transient room rentals, reported and remitted the same way as ordinary sales tax. Whoever is the "vendor" for sales tax purposes (owner or manager, per the contract analysis above) is also responsible for the resort communities tax.

Transient room tax. This one works differently: it's legally imposed on the business or property owner, not the guest — even though it's passed through to guests as a separate line-item charge on each room rental. Because the liability sits with the owner by statute, the owner remains liable for the transient room tax return regardless of who manages the property day to day, though the property manager may take on responsibility for actually filing those returns under the terms of their management contract.

What this means for you

Property managers handling nightly/short-term rentals

Check your management contract's payment-collection terms carefully. If you contract to receive rental payments on the owner's behalf, you become the sales-tax "vendor" — meaning you need your own sales tax license and are on the hook for collecting and remitting sales tax and resort communities tax, not just passing funds through.

Property owners using a management company

Transient room tax liability stays with you as the owner by law, even if your property manager collects it from guests and files the paperwork under your contract. Make sure your management agreement clearly states who actually files the transient room tax return, since the legal liability doesn't automatically shift with day-to-day handling.

Resort community operators and accountants

The resort communities tax rides on the same "vendor" determination as ordinary sales tax — there's no separate analysis needed once you've identified who the sales tax vendor is for a given rental relationship.

Common questions

Q: Is the property manager always responsible for sales tax on nightly rentals?
A: Not automatically — it depends on whether the manager contracts to receive rental payments on the owner's behalf. If so, the manager is the "vendor" and must collect and remit; if the owner directly receives payments, the owner is the vendor.

Q: Who owes transient room tax — the guest or the owner?
A: Legally, the property/business owner owes it, even though it's passed through to guests as a separate charge on their bill.

Q: Can a property manager file transient room tax returns on the owner's behalf?
A: Yes, if their management contract makes them responsible for filing, but the underlying legal liability for the tax stays with the owner.

Q: Does the resort communities tax require separate vendor analysis from sales tax?
A: No — whoever is the sales tax vendor for the rental is also responsible for collecting and remitting the resort communities tax.

Q: Can I rely on this ruling for my own property management arrangement?
A: No — it binds the Commission only for the taxpayer and facts described. Review your specific management contract terms and confirm current requirements with the Commission or a Utah tax professional.

Citations and references

Statutes and rules cited:

• Utah Code Ann. § 59-12-103(1)(k) (sales tax on short-term lodging)
• Utah Code Ann. § 59-12-107(1)(a)(v) (vendor collection/remittance duty)
• Utah Code Ann. § 59-12-102(18) (definition of "vendor")
• Utah Code Ann. § 59-12-301(1) (county transient room tax)
• Utah Code Ann. § 59-12-302 (transient room tax reporting/remittance)
• Utah Admin. Rule R865-19S-96 (transient room tax passed through to purchaser)
• Utah Admin. Rule R865-12L-16 (transient room tax filing requirements)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/95-029.pdf

Original ruling text

95-029

Response June 21, 1995

Request

XXXXX

XXXXX

Re: Request for advisory opinion

Dear XXXXX:

The Division of Real Estate licenses and regulates property managers in this state, including those engaged in nightly rentals in resort areas. As I am sure our Trust Account Auditor XXXXX has told you, we are in the process of drafting administrative rules regulating how property managers are to handle and account for funds received in the nightly rental business.

We are unclear on whether it is the obligation of the owner of the property or his property manager, to collect, account for, and remit local sales and use tax, transient room tax, and resort communities tax.

We would appreciate an advisory opinion on whether these taxes are the owner's liability or his property manager's liability, including which party is responsible for collecting, accounting for, and remitting these taxes.

If you have any questions, please contact me. We appreciate your assistance with this matter.

Sincerely,

XXXXX

RE: Advisory Opinion - Responsibility of Property Managers to Assess and Collect Taxes on Nightly Room Rentals in Resort Communities.

Dear XXXXX,

The Commission has received your request for an advisory opinion on the property manager's role in collecting sales tax, transient room tax, and resort communities tax on nightly rentals. Our research indicates as follows:

A. Sales Tax

1. The amount charged for the rental of hotel, motel, or like accommodations for stays of less than 30 consecutive days is subject to Utah sales tax. Section 59-12-103 (1) (k) Utah Code Ann.

2. Sales tax is a tax on the purchaser, but any vendor who "regularly engages in any activity in connection with the leasing . . . of property located within this state..." is responsible for collecting and remitting sales tax to the Commission. Section 59-12-107(1)(a)(v) Utah Code Ann. The "vendor" is the person receiving payment for any taxable item or service. Section 59-12-102(18).

3. Whether the property manager is a vendor who is required to collect and remit sales tax depends on the nature of the property manager's contractual obligations to the business or property owner. If the property manager contracts to receive payment for room rentals on behalf of the business owner, the property manager is a vendor within the meaning of the sales tax statutes. In that case, the property manager is required to obtain a sales tax license and comply with section 59-12-107 of the Utah Code.

B. Resort Communities Tax

1. A qualifying resort community may impose an additional sales tax on transient room rentals. The resort communities tax is combined with other state and local sales taxes to increase the tax rate applied to taxable sales in the resort community. The tax is reported and remitted in the same manner as sales tax.

2. If the property manager is the vendor within the meaning of section 59-12-107 of the Utah Code, the property manager is responsible for collecting and remitting all sales tax, including the resort communities tax.

C. Transient Room Tax

1. Counties may impose a transient room tax on any company or individual doing business as a motel, hotel, or similar public accommodation within the county's boundaries. Section 59-12-301 (1). Although the transient room tax is a tax on the business owner, and not on the purchaser, the tax is passed through to the purchaser as separate tax which is collected on each room rental. Utah Admin. Rule R865-19S-96.

2. The transient room tax must be reported and remitted monthly or quarterly on a return provided by the Tax Commission or the county as specified by the county ordinance enacting the tax. Section 59-12-302 Utah Code Ann. and Utah Admin. Rule R865-12L-16. The business or property owner is liable for the transient room tax return, but the property manager may be responsible to file the returns for the business owner under terms of their contract.

This opinion is based upon the facts presented in your letter. Obviously, if there are deviations from these facts, this opinion may be negated.

For the Commission,

Alice Shearer

Commissioner