Airbnb Says Yes To Tax Vacation Rentals

MULTI-STATE- Making extra money by renting out a spare bedroom or an entire home has gotten increasingly easier, thanks to online listing services such as Airbnb and Homeaway. The increase in popularity of such services has given rise to unforeseen tax liabilities and consequences. Homeowners are often unaware that they must collect and remit hotel taxes due on short-term rentals. Lodging taxes are separate from any income tax owed on money earned from renting out a guest room or a beach house. Renting a room or home on a short-term basis means homeowners are acting as a hotel. Therefore, hotel taxes are due to the states and cities where the property is located.

Cities and states are more vigilant in tax compliance and collection with the rampant increase of online hosts. Some cities are even considering a ban on short-term rentals altogether. To increase compliance, Airbnb has been making an effort to establish agreements with states and municipalities for some time now. To that end, Arizona Governor Doug Ducey and Airbnb have announced, “a partnership to streamline the home sharing economy.” Beginning January 1, 2017, Airbnb will collect tax on behalf of its Arizona hosts. It will also electronically file returns and remit state and local transaction privilege taxes to the appropriate government entities. This process will both benefit the homeowner and the state.

Airbnb collects lodging taxes on behalf of hosts in a half-dozen locations, including San Francisco and Chicago. In addition, Airbnb announced, that they will collect tax on behalf of hosts in New Orleans, Louisiana, as of January 1, 2017. Hosts in other locations are supposed to collect and remit the tax themselves.

About Davis & Davis LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis & Davis LLC specializes in sales/use tax audit consulting and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals.

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