When you rent points do you pay sales tax as well?

[Jenny-momof3]

I'm looking at renting points for our upcoming trip. Say the points are $11 each... do I pay sales tax on that as well to the owner? Or do we pay a sales tax when we check in? Just trying to figure out how this all works.

 

[corky441]

no sales is paid to the owner nor at the time of check in.

 

[Doctor P]

no sales is paid to the owner nor at the time of check in.

How can you possibly make the first part of that statement? In many states, such a transaction would be subject to tax and such tax COULD be charged by the owner (and in many cases MUST be charged if they are honest).

 

[Quiksilvr]

I'm pretty sure that some sort of tax is owed to the government for any rental. At the very least the owner will owe income taxes on the rental income and it's entirely possible that the owner is responsible for sales tax on renting the points.

That said, these kinds of transactions are very difficult for the IRS to track (and for the comparable tax collection agency in your state). This is the equivalent of a 20 year old kid getting paid cash under the table to cut your grass. Does he technically owe tax on the income? Yeah. Does he technically owe employment taxes (i.e., FICA) on the income? Yeah. Is he ever going to get caught if he doesn't pay it? Not likely.

I'm obviously not recommending that people not pay taxes they owe; I'm just pointing out that it's difficult to prove these things.

 

[5forDiz]

Jenny your question is a legitimate one. The member that you ultimately deal with and you should discuss what exactly are the particulars of your rental arrangement and both parties must be comfortable with it. You may find that for as many different members that you speak with there will be as many different approaches, opinions etc....

Best wishes on your planning

( PS I'm a mom to too! )

 

[mikesmom]

It also depends on your state and their state. Sales tax is a State tax. It would depend on whether your state (or their state) felt that a "rental" was goods or services. In my state goods are taxed, services are not. You don't pay sales tax on apartment rent. In some states, there is Sales Tax on groceries, in others food is not taxable.

The point is probably moot, anyway. Generally there is no taxable event when the parties are in different states unless the Seller has a "business presence" in the Buyers' state. That's why when I buy items over the Internet from Amazon there is no sales tax. When I buy over the Internet from Target there is Sales Tax because Target has stores in our state.

I own a business. When I sell items to a customer in another state, there is no Sales Tax. If I sell items to a customer in My state, there is Sales Tax. Unless of course the State is California (and a couple of others) that charges some sort of tax on anything sold in their state whether or not the Seller has a "business presence" there.

Confused yet? Sales Tax is a bear. Bottom line, you probably don't have a taxable event.