Avalara MyLodgeTax > Blog > State and Local News > New Arizona law requires all online short-term vacation rental platforms to collect lodging tax

New Arizona law requires all online short-term vacation rental platforms to collect lodging tax

  • May 8, 2018 | Jennifer Sokolowsky

Arizona Governor Doug Ducey has signed a bill into law that requires all short-term rental online marketplaces to collect and remit state and local taxes on short-term rentals.

Currently, Airbnb is the only online marketplace that collects taxes on short-term rentals booked through its platform, as a result of a voluntary agreement reached with the state in 2017. Airbnb collects state transaction privilege tax, county excise tax, and local transient occupancy tax on short-term rentals.

Starting January 1, 2019, all online short-term vacation rental marketplaces, including Airbnb, VRBO, and HomeAway, will be required to register with the Arizona Department of Revenue and collect the tax on bookings.

The state already requires individual short-term vacation rental owners to get a license to collect and remit state and local taxes — although many don’t. MyLodgeTax is a service that can help short-term rental operators comply with Arizona lodging tax registration, collection, and filing requirements.

According to the bill’s sponsor, the new rules are designed to level the playing field among companies voluntarily collecting taxes, companies not collecting taxes, and brick-and-mortar hospitality businesses such as hotels and motels.

The new law is expected to result in higher tax revenue for the state. Airbnb generated $11.5 million in tax revenue in 2017.

Oregon also recently changed its law governing short-term rental tax collection to redefine which short-term rental intermediaries are subject to the law. The new definition applies to online marketplaces such as Airbnb, VRBO, and HomeAway.

Starting July 1, intermediaries that “collect payment for short-term rentals” or “receive commissions or fees and require the lodging provider to collect payment through a specific third-party entity” are required to collect and remit applicable transient occupancy taxes on the state or local level for short-term rentals in Oregon.

Currently, only Airbnb collects taxes on short-term rentals though voluntary agreements with the state as well as selected counties and cities.

The change is estimated to generate about $2 million per year for local governments and $400,000 annually for the state of Oregon.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jennifer Sokolowsky
Avalara Author Jennifer Sokolowsky
Jennifer Sokolowsky writes about tax, legal, and tech topics. She has an extensive international background in journalism and marketing, including work with The Seattle Times, The Prague Post, Avvo, and Marriott.