Airbnb to collect tax on behalf of Tennessee hosts starting March 2018
- Jan 23, 2018 | Gail Cole
Effective March 1, 2018, Airbnb will collect and remit state and local sales tax on behalf of its Tennessee hosts. This is a marked departure from current practice. Through Feb. 28, 2018, most people in Tennessee who rent properties through the lodging marketplace platform are responsible for collecting and remitting applicable taxes themselves.
The news was announced by email to Airbnb hosts last week, and Airbnb now lists the state of Tennessee on the webpage, In what areas is occupancy tax collection and remittance by Airbnb available?
While Airbnb has been collecting and remitting local tax on behalf of its Memphis hosts since June 1, 2017, it doesn’t currently collect the state sales tax owed on Memphis rentals.
Tax collection services are part of the company’s strategy to work with states and localities, perhaps in response to the backlash created by the meteoric growth of the short-term rental industry. Hotels claim their business is being undercut by short-term rental owners who don’t charge tax as they should. Locals talk of skyrocketing real-estate prices, reduced inventory, and vacationers partying until dawn in residential areas.
Some localities, including San Francisco and Seattle, now regulate the industry. Others, including Nashville, have considered prohibiting short-term rentals that are not owner-occupied. Last fall, Nashville launched a hotline for neighbors to report unpermitted short-term rentals and complaints about poor behavior (e.g., loud noise, parking problems).
Helping state and local governments obtain the tax revenue they’re owed helps cast a favorable light on the company, if not the industry in general. According to Airbnb, were the company allowed to collect and remit taxes on behalf of hosts in the 50 largest cities in the country “the windfall for these local governments would add up to $2.5 billion over the next 10 years.”
Short-term rental owners and operators in Tennessee who rent out properties through other venues, such as their own website, will still be required to collect and remit applicable taxes on those transactions.
Learn how tax automation software facilitates lodging tax compliance in Tennessee and other states at mylodgetax.avalara.com.