Does Airbnb register and file for short-term rental hosts when it collects lodging tax?
- Jul 16, 2018 | Jennifer Sokolowsky
Airbnb collects lodging taxes for its hosts in a growing number of locations. The online short-term rental platform has spent several years proactively pursuing lodging tax collection agreements with states, counties, and cities — both in the United States and abroad.
Typically, these agreements mean that Airbnb automatically adds applicable lodging taxes to guests’ bills, collects the tax, and remits it to the tax jurisdiction on behalf of hosts. One result of these agreements is that tax jurisdictions get a lot more lodging tax collected than they would if it were left up to individual hosts.
These agreements also spare hosts the burden of collecting lodging taxes from guests. However, you need to be aware that Airbnb may not be taking care of all your lodging tax compliance requirements, even if it is collecting taxes for you.
While other platforms, such as HomeAway and VRBO, collect taxes on behalf of hosts in far fewer locations, they’re starting to collect in more places. If you book with these platforms, you also need to be aware of what your platform is or is not taking care of for you in terms of tax compliance.
As with everything related to lodging taxes, the rules to follow are extremely local and depend entirely on where your short-term rental property is located. So it’s imperative for you to know which tax jurisdictions cover your rental property and to be aware of your tax obligations there.
Keep in mind that you may have lodging tax obligations in more than one jurisdiction (for example, city, county, and state taxes). The total tax amount you charge guests for your rental may also be made up of more than one kind of tax, including sales taxes, transient occupancy taxes, hotel taxes, tourism taxes, and more.
Short-term rental business registration
First, there is the issue of short-term rental business registration. Jurisdictions that regulate short-term rentals may require hosts to register for a short-term rental permit, business permit, or other kind of registration that essentially allows the host to legally operate short-term rentals as a business. In some cases, you may be required to get both a short-term rental permit and a separate business permit.
While in most cases, Airbnb does not take care of this for its hosts, Airbnb does offer what is called pass-through registration in certain areas.
This means that hosts can apply for required permits, licenses, or registration directly from Airbnb’s website. Airbnb offers pass-through registration in San Francisco, for example, which has one of the strictest short-term rental laws in the U.S.
Formerly, Airbnb also offered pass-through registration in New Orleans, but recently discontinued it after the New Orleans City Council placed a nine-month moratorium on new and renewed short-term licenses for whole-home rentals in many areas of the city.
However, in the vast majority of jurisdictions, Airbnb does not assist hosts in short-term rental business registrations, which means hosts are responsible for making sure they comply with local registration requirements.
Lodging tax registration
Any jurisdiction that levies short-term rental taxes will require hosts to register for tax purposes. Since total lodging taxes are often made up of a variety of different taxes, short-term rental operators may need to register for sales tax and/or lodging tax permits. These may be included as part of a short-term rental business permit or require a separate registration.
Airbnb offers pass-through registration for business licenses (which include tax registration) for San Francisco hosts. However, Airbnb does not generally take care of this registration on behalf of hosts, even if it is collecting taxes in the host’s jurisdiction. Hosts are responsible for lodging tax registration on their own.
Lodging tax return filing
Another issue is lodging tax return filing. Once you start collecting lodging taxes for a jurisdiction, you’re required to file regular lodging tax returns and remit whatever tax you’ve collected from your guests. Often hosts are required to file lodging tax returns monthly, but the frequency depends on the jurisdiction.
Hosts may assume that Airbnb is fulfilling these obligations for them. But, it’s important to understand that when Airbnb collects lodging taxes in a particular jurisdiction, it generally does not file lodging tax returns on behalf of individual hosts. Rather, Airbnb pays a lump sum to the jurisdiction. In the vast majority of jurisdictions, Airbnb does not share identifying information on hosts when it submits tax revenues. That means it’s most often up to hosts themselves to report how much lodging tax they’ve collected and remitted
This is where it gets tricky. In some jurisdictions, hosts are explicitly required to file regular lodging tax returns even if Airbnb (or other platforms, such as VRBO or HomeAway) collects taxes for them. Other jurisdictions do not have this requirement.
In Los Angeles, for example, the city imposes a 14 percent transient occupancy tax on the listing price of short-term rentals. Airbnb collects and remits this for hosts. However, “hosts are still required to file monthly returns to the Office of Finance, and should take a deduction for tax collected and remitted by Airbnb (and any other applicable platform)."
Likewise, in Washington state, Airbnb, HomeAway, and VRBO collect taxes on short-term rentals for hosts, but hosts with these platforms are still required to register with the Department of Revenue and report their rental income.
Meanwhile, in Portland, hosts are not required to file lodging tax returns if their booking platform is collecting taxes for them. Airbnb, HomeAway, and VRBO collect all state, county and city taxes on behalf of their Portland hosts. While Portland hosts are required to register for lodging tax purposes, they are not required to submit lodging tax returns to the city as long as their online platform is collecting taxes on their behalf.
The responsibility is yours
When Airbnb or other online short-term rental booking platforms collect taxes for their hosts, it undoubtedly saves time and trouble. But, you need to be aware of what your full lodging tax obligations are in the jurisdictions where you’re located.
In many cases, you simply can’t assume that Airbnb or other companies are taking care of all lodging tax compliance for you. For hosts looking for assistance with lodging tax registration, collection, and filing, MyLodgeTax offers help in making sure you’re getting it all right.