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Who collects Airbnb lodging taxes?

  • Nov 2, 2018 | Jennifer Sokolowsky

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In the business of running short-term rentals, dealing with lodging taxes is increasingly becoming an everyday necessity for hosts. While there was a time when short-term rentals may have flown under the radar for tax authorities, the growing popularity of short-term rentals through platforms such as Airbnb, HomeAway, and VRBO has gotten governments’ attention.

More and more tax jurisdictions are making sure short-term rentals are included in taxation and are cracking down on short-term rental operators who don’t follow the rules. So it’s important for short-term rental hosts to know those rules.

First of all, you need to know what lodging taxes are. These are taxes that are levied on short-term transient accommodations. They’re charged as a percentage of the cost of the accommodations and are paid by the guest paying for the stay.

These taxes may be known as sales taxes, hotel taxes, transient occupancy taxes, bed taxes, tourism taxes, and more. In most cases, the final tax rate that guests pay is made up of various taxes from different jurisdictions, including city, county, state, or special district taxes. The final rate depends on which tax jurisdictions govern your rental, which is determined by the property’s address.

So how does the tax get from the guest to the government? The answer is that the person or entity that charges the guest for the accommodations also collects the tax and passes it on to the tax authority.

You are responsible for collecting lodging taxes

As a short-term rental host, you are responsible for collecting lodging taxes from your guests. Tax authorities hold short-term rental operators responsible for administering lodging in the same way merchants are responsible for collecting sales taxes on purchases at the point of sale.

While you may get help in collecting and remitting taxes on your short-term rental, complying with lodging tax obligations is ultimately your responsibility as the operator of a short-term rental business.

Short-term rental platforms may collect lodging taxes

One of the ways you can get help with collecting lodging taxes is if your short-term rental platform (such as Airbnb, HomeAway, VRBO, or others) collects lodging taxes for you when it processes booking and payment from your guests. In this case, the platform will collect the tax from the guest at the time of payment and remit it to the correct tax authority on your behalf.

Airbnb is the leading platform when it comes to lodging tax collection, with more than 300 tax collection agreements with state and local jurisdictions within the United States. However, HomeAway/VRBO is starting to collect lodging taxes on behalf of their hosts in a growing number of jurisdictions.

Tax collection caveats

While tax collection by your rental platform can make lodging tax compliance easier for you, it’s important to know that platforms may not collect taxes at all in your jurisdiction, or they may collect some taxes but not others. Which platforms collect which lodging taxes is entirely dependent on the location of your short-term rental property.

For example, if you operate a short-term rental in Breckenridge, Colorado, and you use Airbnb, Airbnb collects some short-term rental taxes there, including Colorado state sales tax, county lodging tax, local marketing district tax, and local sales tax. However, the town of Breckenridge also requires short-term rental hosts to collect a town public accommodation tax from guests, which Airbnb does not collect on behalf of its hosts. That means hosts are responsible for collecting the town accommodation tax and remitting it to Breckenridge tax authorities even if Airbnb is collecting and remitting other taxes due.

Other online booking platforms such as VRBO and HomeAway do not collect taxes for their hosts in Breckenridge, so Breckenridge hosts who use these platforms are responsible for collecting all taxes due on short-term rentals and filing them with the right agency.

In a few places, including the state of Oregon, all short-term rental platforms that collect payment for short-term rental hosts are required by law to collect state lodging tax when the listing is booked and file the tax with the state. This includes Airbnb, HomeAway, VRBO, and others.

However, this is a rare exception. In most tax jurisdictions, short-term rental platforms only collect taxes if they have an agreement with the tax authority to do so. And even in Oregon, the requirement for rental platforms to collect taxes on behalf of hosts only applies to state taxes. You may also owe local lodging taxes, and if your rental platform does not collect them for you, you are responsible for collecting and remitting them.

Registration and filing

It’s important to understand that lodging tax obligations don’t stop with collecting taxes and remitting them. In most jurisdictions, those obligations also include tax registration and filing.

In Oregon, if your rental platform is collecting all state taxes for you, you do not need to file regular tax returns. However, this is not the norm. In most places, you are required to register with the tax authority — and in most jurisdictions, you must file returns even if you don’t have any short-term rental income and have collected no lodging taxes from guests for the period.

Rental platforms that collect taxes on behalf of hosts generally remit all the taxes for a given jurisdiction in a lump sum, rather than in individual amounts for each host. This means that it’s usually up to you to report to the tax authority how much you remitted in short-term rental taxes or how much was collected and paid on your behalf.

What this means is that in most jurisdictions, even if your short-term rental platform is collecting taxes on your behalf, you are most likely still required to take care of registration and filing yourself.

Getting help with lodging tax collection

While it is your responsibility to comply with lodging tax obligations for your short-term rental, you can get expert assistance. MyLodgeTax can help ease the burden of lodging tax compliance by taking care of registration and filing for you — for all the different taxes that may be required for your short-term rental.

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.