As Airbnb begins paying Occupancy Taxes, the good news and the bad news
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As Airbnb reaches agreements with more U.S. states and cities over payment of Occupancy Taxes, we look at the implications for all independent vacation rental owners.
Since the beginning of December listing site giant Airbnb has been charging guests Occupancy Taxes on behalf of their hosts in the state of Florida. Whether the hosts agree or not, this money is paid to the state and county authorities.
Some vacation rental owners see this as a helpful move, relieving them of the paperwork. Others feel threatened by it and are not comfortable with Airbnb keeping records and dealing with tax authorities. Previously, it was the responsibility of individual owners to collect, declare and pass on these occupancy taxes.
It’s the latest development in Airbnb’s rear guard action against state authorities across America who have pressed the company for unpaid taxes. Florida is the latest in a list of states and cities that charge occupancy taxes on Airbnb rentals. Among these are North Carolina, Rhode Island, Washington State and the cities of Chicago, San Francisco and Washington D.C.
What are occupancy taxes?
According to Airbnb, ‘Occupancy tax is a tax on the rental of rooms that your state or locality may require. In many places this is known as an occupancy tax, but may also be known as a lodging tax, a room tax, a sales tax, a tourist tax, or a hotel tax.
‘Occupancy tax rates and rules vary by city, county, state, and country. They’re generally owed on the accommodations price plus any fees for other items, like cleanings or extra guests. In some places, occupancy tax is required on a per person, per night basis.’
In the newly signed Florida-specific agreement, Airbnb agreed to begin collecting tourist-tax revenue in the state’s 22 counties. Host anonymity is preserved for now in the agreement which states that Airbnb will provide only ‘anonymous reservation IDs’. Nor will it be required to ‘produce any personally identifiable information’ on hosts and guests.
Costs will increase by 12 percent
Costs will vary from county to county, but in Palm Beach County, Florida, the cost of an Airbnb room increases by 12 percent with tourist and sales taxes.
Owners who are about to sign up with Airbnb or who may have concerns about whether or when this will happen in their locality should visit Airbnb’s website.
Some will see this as another example of a big listing site calling the shots. To be fair, Airbnb is bowing to pressure to provide a level playing field for the traditional hospitality industry who pay these occupancy taxes as a matter of course.
There can be no future guarantees over how much information the company will be obliged to disclose about Airbnb accommodation transactions to the tax revenue authorities. But those who want to bypass the control of the big listing sites can do so by having their own website and their own direct booking and payment facilities.
Which is why Homes and Rooms subscribers have little to fear as we provide these essentials and more to those who wish to retain control of their own vacation rental.
Keep your tax details confidential
For Homes and Rooms subscribers worried about tax implications, be assured that we do not share any tax information with the authorities regarding either Occupancy Taxes or income from vacation rental properties. We provide an easily configured, flexible Currency/Tax Administrator facility that enables you to include and charge for the full range of taxes. As well as supplying running totals and detailed breakdowns of your rental income. The information you collect using our services is there exclusively for your information as owner, to help you manage your property more effectively.
It’s clear that this move to occupancy taxes paid directly by Airbnb is gaining a firm foothold and spreading beyond individual states. You may be wondering when Airbnb will start collecting these taxes in your area?
Airbnb’s website has no ready answer. ‘We’ll let you know if an occupancy tax related feature becomes available for your listing,’ they say. Who can predict what lies ahead further down the line?
They also say they are ‘100 percent committed to being constructive partners with regulatory agencies and policymakers.’ And if that means disclosing details of transactions to the income revenue authorities of the countries in which Airbnb operates, what then?