In mid-February, Airbnb will begin to collect hotel taxes in four more cities: Washington, D.C., Chicago, San Jose, and Amsterdam. The short-term home rental service has been collecting taxes in Portland, Oregon and San Francisco for about a year now.

The company allows users to list their home for rent for any amount of time. So, if you’re going out of town for the weekend, rent your apartment to a tourist coming to town. Visiting travelers find the accommodations more personal and rates cheaper than traditional hotels. However, the concept is not without its problems. In addition to the squatter who refuses to leave, as you might expect, users have returned home to find prostitutes reportedly renting out apartments for weeks at a time to save money on quick hotel stays, burglars using the service to ransack trusting victims’ apartments, and makeshift meth dens springing up.

But the problem most cities are concerned about comes down to money, as usual. Traditional hotels pay taxes for each guest’s stay, because the easiest way for a government to make money is to tax the people who have no power to complain about it. Because the Airbnb service allows everyday people to turn their extra bedrooms into economic opportunities, not unlike a hotel does, cities believe that renters should pay the same tax that hotel room renters do. And the tax market is lucrative: some enterprising Airbnb homeowners have become mini-landlords and turned their rentals into a business of its own, with some buying second apartments exclusively to list on Airbnb.

Cities are also understandably worried about the fuzzy area between landlord and hotelier that these private citizens are flirting with. People have made some considerable income exclusively through Airbnb. New York, probably the state most hostile to the company, has cracked down on Airbnbers who have made money through the service. One woman was sued by her landlord for renting out her rent-controlled apartment for market rates, making $61,000 in the process. Another was sued by her landlord for making $78,000 a year for the same. These people take advantage of rent control laws, profiting at the expense of their landlords, as well as zoning laws. Cities would like to control where tourists stay, and neighbors would rather not see a hotel-like rotation of characters in their building.

While Airbnb has argued previously that it either wasn’t running a hotel or that its users are solely responsible for reporting their own tax information, it has recently come around to the idea of collecting the taxes on behalf of the cities and remitting them in one lump sum. The company will omit personal information about individual guests and rentals. This move is part of a step towards legitimizing the service in some cities eyes, taking into account the ridiculous horror stories detailed earlier. Previously, homeowners usually had to register with their cities and collect the taxes on their own, which obviously no regular person is going to do. Every locality has different laws regarding hotel taxes and zoning, often conflicting and way too complicated for the company to account for universally. By collecting taxes for the cities, Airbnb will help slide the process of establishing laws in favor of the service through legislatures via a fiscal lubricant. If cities are satisfied with the new tax income, then they may be more willing to overlook the externalities and pass laws favorable to services like Airbnb. At least, that’s what Airbnb hopes.

–Tom Hayden

Tagged with:
 

Comments are closed.