The COVID pandemic, recent inflation, and general trends have resulted in changes to the tourism industry in Oregon, and we thought it would be a good time for you to review and consider updating your transient lodging tax (“TLT”) ordinance. 

As a reminder, a transient lodging (or room) tax is a tax on occupied hotels, motels, inns, cabins, condominiums, apartment units or other dwelling units that are used for temporary occupancy.  The state has its own transient lodging tax, and state law dictates the use of certain transient lodging tax revenues by local governments.  (This firm and the League of Oregon Cities prepared a Legal Guide to Collecting Lodging Tax in Oregon, last updated in February 2020, that includes general information about the tax, as well as a model ordinance.)

TLT ordinances at the local level have been enacted and amended at various times – some are several decades old and others are relatively new.  Quite often, once the ordinance is enacted, a jurisdiction fails to review the tax to see if updates are needed.  We have identified a few specific and common areas that you should review to ensure that your TLT ordinance reflects best practices.  If your TLT ordinance does not already include the following, you may want to consider amendments to explicitly state:

• The TLT is paid by the occupant and held in trust by the lodging operator for the local government.  This should be stated expressly and not just implied, as doing so helps protect the local government’s claim to the funds in the event of the lodging's bankruptcy or receivership.

• How tax liability should be handled in the event the dwelling property is sold mid-quarter.  Most often, TLT filings and payments are due on a quarterly basis even though they are collected by the operator daily.  If a property is sold in between filings, a question can arise as to how the already-collected funds should be paid.  Is the tax liability rolled up in the closing costs and paid by the title company, or is the operator responsible for the partial quarter?  If the operator is responsible, is the liability due before closing?  Local jurisdictions should provide procedures so that in the event of mid-quarter transfers of property receipt of full payment is ensured.

• A definition of “transient lodging intermediaries” that specifically includes a person or entity that “receives a fee or commission and requires the transient lodging provider to use a specified third-party entity to collect the consideration charged for occupancy of the transient lodging.”  In 2018, the legislature clarified that online transient lodging platforms, such as Airbnb and VRBO, are considered “transient lodging intermediaries” under ORS 320.300, unless otherwise provided by city or county ordinance, resolution, or agreement.  Jurisdictions wishing to require hosting platforms and online travel companies to collect and remit the local TLT should ensure their ordinance includes this language in its definition of “transient lodging intermediaries.”

Please don’t hesitate to reach out with questions or concerns; our office is happy to help review your TLT ordinance and advise what makes the most sense for your jurisdiction.