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Solar eclipse forecast: Sunny day for state tax collectors?

From 10:17 a.m. Pacific time until 2:47 p.m. Eastern time, give or take a few minutes before and after, on Monday, Aug. 21, millions of Americans will be watching — safely, please! — the first total solar eclipse visible in the continental United States in more than 38 years.

Path of totality August 21 2017 solar eclipse_Ernie Wright_NASA-Goddard-SVS
The line shows the entire path of totality across the contiguous United States for the Aug. 21, 2017 total solar eclipse. Click image for a larger view. (Map by Ernie Wright, NASA/Goddard/SVS)

That also likely will mean a big boost in businesses, both long-established and pop-ups related to the astronomical event as it moves along a 70-mile wide total darkness path across 14 states.

And that means more money for the retailers' state treasuries. 

Maybe.

Many states, many taxes: Tax officials in states that are expecting an influx of eclipse visitors are trying to get the word out that tax laws apply regardless of what happens in the heavens.

The Idaho State Tax Commission has posted a one-page fact sheet detailing when individuals must collect taxes the day of the eclipse. For example, note Gem State tax officials:

  • The state's 6 percent state sales tax applies to all those eclipse T-shirts you sell, as well as any other solar souvenirs and food.
  • If you're renting out your yard to observers, you'll owe a 2 percent travel and convention tax, the state sales tax and local sales taxes on that money.
  • If your visitors are overnighters or longer, be they renting a room in your personal residence, vacation home or that trailer out back, you'll need to collect Idaho's 6 percent sales tax and any other local sales taxes that apply, as well as the state’s 2 percent travel and convention (aka lodging) tax.
Path-of-tee-shirt-totality_smallbusiness-dot-com
Image courtesy SmallBusiness.com

If you use Airbnb to rent your property during the eclipse, that home rental clearinghouse might take care of collecting the tax from your short-term renters. If not, it's up to you to take care of tax tasks. That, in many locations, includes local permits.

Note, too, to keep track of the days your sky gazing guests are there. Their stay this weekend/early next week counts toward the 14 days you can lease your property and avoid facing any federal income tax on the rent. But also remember that this is a federal law; your state might have different income tax rules.

Idaho isn't alone in trying to get the tax word out to solar eclipse entrepreneurs.

Illinois Revenue has posted a special fact sheet for vendors at the 2017 Carbondale Eclipse Market Place. Those participants, remind Land of Lincoln tax collectors, must collect and remit at 9.75 percent of their total sales. Failure to do so, according to the notice, "will jeopardize your participation in future Illinois events."

Eclipse Stages by Rick Fienberg_TravelQuest International and Wilderness Travel
Eclipse stages by Rick Fienberg, TravelQuest International and Wilderness Travel

Compliance vs. getting caught: "There are people who will rent out their driveways and their street corners for parking," Verenda Smith, deputy director of the Federation of Tax Administrators, told Bloomberg BNA. "You're trying to teach people to pay attention and not get caught later."

If you're in the prime eclipse path and you haven't seen anything in your local media about potential taxes on event related retail or rentals, check with your state tax department. As Smith notes, it's always better to comply with tax laws from the get-go instead of trying to clean up after the fact.

Of course, many event-only entrepreneurs and even some businesses that have been around for years might just decide to blow off tax collection on special eclipse related products and services. After all, how diligent will tax officials be in trying to track down every tax penny for a short-term, special event.

That's true. But there's always the chance that you could be among those who does get caught in an eclipse-related tax trap. So don't hide in the shadows.

Conduct your business on Monday's eclipse day just like you would all the other 364, including collecting the proper taxes.

If you're traveling to an eclipses location, are you staying at a traditional hotel or in a short-term residential rental? If it's someone's house, take note of whether you're charged taxes and let me and the ol' blog's readers know by leaving a comment.

I'm not trying to rat out anyone, so general reports only, please. But I would love to hear at least anecdotally how many folks complied with tax laws in connection with eclipse-sparked transactions.

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