How to Record Taxes Paid to Owners Using Other Fees
When the property manager does not remit taxes on behalf of owners, any taxes collected from guests must be passed through to the owner and shown on the owner statement. In this case, you’ll use an Other Fee to remove the tax liability from the general ledger and present the tax amount to the owner correctly.
This article explains how to set up and apply Taxes Paid to Owners / Taxes Passed Through to Owners in VRTrust.
When This Setup Is Required
Use this setup when:
Taxes are collected from guests on reservation invoices
The owner (not the property manager) is responsible for remitting those taxes
The tax amounts must appear on the owner statement
Do not use this setup when:
The property manager remits taxes on behalf of owners
How Taxes Are Recorded by Default
By default:
All tax amounts from reservations are mapped in Reservation Mappings
Taxes post to a tax liability account, such as:
Lodging and Occupancy Taxes Payable
Sales Tax Payable
If the owner is responsible for remittance, this liability must be removed from the general ledger and passed through to the owner.
1. Create the Taxes Paid to Owners Fee
Go to Fees & Commissions
Select Other Fees
Choose Taxes Paid to Owners or Taxes Passed Through to Owners
This template is pre-populated and configured to pass through 100% of the tax amount collected from guests.
2. Configure Advanced Settings
Open Advanced Settings and review:
Revenue Recognition
Set the default revenue recognition method
Include Reservations
Select All Reservations so all applicable tax amounts are passed through
3. Review Account Mapping
This fee uses the following accounts:
Revenue Account: Taxes Passed Through to Owners
Revenue Party: Owner
Appears on the Owner Statement
Expense Account: Tax Liability Account
Example: Lodging and Occupancy Taxes Payable
Expense Party: Owner
Accounts Included in the Fee
Include all tax liability accounts that are payable to owners
This setup:
Removes the tax liability from the general ledger
Records the tax amount as revenue passed through to the owner
Displays the tax on the owner statement
4. Verify on a Reservation and Owner Statement
To confirm the setup:
Open a reservation where tax was collected
Review the journal entries
You will see:
The tax liability reduced
The tax amount reclassified as paid to the owner
Example:
Tax collected: $38.23
The fee removes the $38.23 liability
The $38.23 appears in the Taxes column on the owner statement
5. Apply the Fee to Listings
Apply this fee to all listings where:
The property manager does not remit taxes
Tax amounts collected from guests must be paid to owners
This ensures taxes are consistently passed through on owner statements.
Summary
Using the Taxes Paid to Owners fee allows you to:
Remove tax liabilities from the general ledger
Present collected taxes on owner statements
Ensure owners receive tax amounts they are responsible for remitting
Keep trust accounting and reporting accurate
Apply this fee to all applicable listings to ensure consistent handling of owner-paid taxes.