Two audits of vacation home rentals net over $38,800 in TOT and penalties

It was discovered that a South Lake Tahoe homeowner had been renting out his vacation home since at least 2008 without paying transient occupancy tax (TOT). An audit of the City's Vacation Home Rental program discovered the violation, and when the homeowner refused to comply so a criminal investigation was conducted.

Even though the homeowner denied renting out the home, evidence showed the contrary. At the conclusion of the investigation the owner was given the opportunity to voluntarily comply one more time. When confronted with the evidence the owner admitted to renting out the vacation home and agreed to a settlement rather than face a possible felony conviction. The owner was required to pay over $14,800 in TOT and penalties.

Earlier this year, another routine audit brought in over $24,000 in past TOT fees. That owner arranged a payment plan and has kept current on their TOT since the audit.

Failure to forward TOT to the City of South Lake Tahoe per Code 28A-13, is a crime under California Penal Code Section 424; Embezzlement of Public Funds. In egregious cases such as these owners will be prosecuted to the full extent of the law and will still be held accountable for the TOT and assessed penalties. Due to the lengthy criminal investigation of this case, the penalties and assessments were significantly increased.

“In these cases, we have been successful in negotiating with those who do not follow the law to allow for agreeable outcomes. This is a time-consuming process and our intent is to gain voluntary compliance. Those who might be inclined to break the law could also be pursued criminally. People who have the means to rent out a second home or have such investment property should simply follow the law as the police department may resort to using criminal prosecution as a deterrent in the future,” said South Lake Tahoe Police Chief Brian Uhler.

While the vast majority of home owners who rent out their homes comply with the law, there are some who elect to skirt the law to make an extra buck or two. Owners who fail to forward TOT as required are stealing from the City. The money collected by the owners is on behalf of the City which funds City Services which are essential to our tourism based economy.