Posted on 05/06/2019 2:17:47 PM PDT by Kaslin
Last June, the Supreme Court overturned a rule requiring businesses to have some form of physical presence in a state in order to be subject to sales tax collection liability within that state. Hoteliers think that’s as good a reason as any to hit at upstart competitors who threaten their privileged incumbent status.
At issue are lodging taxes assessed by states and local governments, a source of much consternation for government officials and homesharers alike ever since the inception of the sharing economy. Hotels have argued that homeshare services like Airbnb should be treated the same as the biggest hotels are when it comes to regulation and taxation. Homesharers, on the other hand, have pointed out that this business model is very different from that of hotels and would be devastated by being exposed to regulations and taxes designed for a different industry.
Airbnb and other homesharing services have worked with state and local governments to develop “voluntary collection agreements” (VCAs), by which Airbnb agrees to collect taxes on behalf of homesharers that use its platform and remit them. In return, Airbnb receives a form of legal legitimacy, and a tax system that is more tailored to its business model. VCAs aren’t a perfect solution, but they are better than simplistically imposing hotel taxes on a very different new industry.
The Supreme Court’s decision in South Dakota v. Wayfair, hoteliers argue, changed that. The American Hotel and Lodging Association released a report arguing that the Wayfair decision means that states and localities, no longer bound by “physical presence” rules, now can hit Airbnb with whatever taxes it likes.
However, this argument is a bit of a non sequitur. Physical presence was never at issue — homesharers of course always had physical presence in the state or jurisdiction they were operating in (in the form of the home they were sharing!) The question has always been the responsibility that Airbnb itself had to collect and remit taxes on behalf of the consumers using its platform.
The Wayfair decision says nothing about the tax treatment of the business model that Airbnb operates. And while it is true that many states have used the Wayfair decision to justify taxation of other online marketplaces, consumer goods sales involve very different tax policy questions from home and room rental.
In effect, large hotel chains would like to use Wayfair to argue that states and localities should remove Airbnb from the negotiation table as governments ponderously react to this relatively new industry. That could result in the rules affecting Airbnb not taking into account the industry’s uniqueness, and failing to find a long-term solution that recognizes and fosters new business models that benefit consumers.
The Wayfair decision itself has shown that state governments often prioritize access to new revenues over tax policy that takes into account the unique circumstances of the businesses that are affected by it. Despite the fact that the ruling exposed small online retailers to potentially thousands of taxing jurisdictions nationwide, state governments have gone ahead with safe harbors that were too low, shoddy and incomplete regulatory pronouncements, and overly complex tax environments — all in the name of pretty meager revenue offerings.
Airbnb, and the homesharers and lodgers that use the service, should not be subjected to a similarly slapdash procedure. A seat at the table for homesharers is important as governments react to the gig economy, whatever the Wayfair decision — and certainly hoteliers — say.
Since most large metro areas have piled tax upon tax on hotel fees in order to build stadiums and the like. the little guy looking to list his AirBNB is SOL.
Taxes are getting ridiculous but should be equal responsibility of everyone.
The taxing as a hotel room I can understand, don’t like it but I get it. It’s the extending of regulations to AirBnB that’s the problem. It would be analogous to the regulation that brick and mortar restaurants must have restroom facilities and the extending that to food trucks. Besides AirBnBs are pretty much self regulated, a couple bad reviews can sink you.
Hotel taxes and fees are like a Tarriff on visiting non-locals.
The issue in Los Angeles and some other major cities is that people are buying apartment buildings, evicting all the tenants, then turning them into de facto hotels, renting out the units through AirBnB while avoiding any of the regulations and taxes on hotels. This cuts the rental housing stock, driving up costs for renters and pricing some out of the market, with all that entails.
This argument makes no sense. I have a unique business model where I should be obligated to pay no taxes whatsoever. Does that make me a credible player in the industry whose concerns should be addressed by my state legislature? LOL.
That may be a good place for a narrowly defined regulation as it impacts the stand alone AirBnBs, such as no more one rental per 10,20,30 (pick a number) total units to owned by a single or related entity.
There's no compelling reason to AirBnB any differently than a hotel room when it comes to taxes and government regulations. Your analogy isn't really a good one. A better analogy would be a state sales tax that is applied to restaurants and retail stores that sell food ... and the food truck owner is claiming he should be exempt from that sales tax.
It’s not the taxes that’s the issue. ItS the regs. How often should the BnB have a health and safety inspection. After every client?
Some folks do buy houses for the sole purpose of renting them out as airbnb. Separating those from the rest of the folks is the problem to be solved.
They’re trying to help the special interests and screw teh little guy.
This rule needs to be a statute.
If I own a hotel in the same state and town as the AirBnB, how often do I have to get a health and safety inspection?
There's the answer to your question.
Airbnb already collects these taxes and remits them to the state. The guest pays for them to Airbnb just like he does at hotels which also remit them to the state.
The host does not have to collect anything including the rent. The guest pays Airbnb for everything with his credit card and the money is wired to the bank account of the host the day after the guest arrives.
Although it is portrayed as the “little guy,” in fact most AirBNBs here are commercial operations, where companies buy up housing, convert it to defacto hotel rental pools, and then run it through AirBNB.
It's analogous to business licensing, not restrooms or handicap access.
BUT it makes me wonder if a person opens his home to a renter, can a lawyer use the ADA laws to get some money if the bathroom or stairs are not handicapped accessible?
One of the things liberals don’t like about the tax sharing agreements is that it doesn’t give them the names and addresses of home-sharers. And these people want to hit every home-sharer with business license fees and other costs, not just collect the hotel tax.
BUT it makes me wonder if a person opens his home to a renter, can a lawyer use the ADA laws to get some money if the bathroom or stairs are not handicapped accessible?
Additionally, in the United States, the Americans with Disabilities Act and state disability access laws may apply to some hosts with five or more listings.
So if you own 4 or less rental properties you are exempt from the ADA laws. If you own more you best CYA...
5 property listings or 5 dates soliciting the same property?
5 separate rooms in one dwelling or 5 distinct addresses?
5 distinct addresses/units. Each property whether rented as a whole unit/house/condo or 1 to xx rooms only rented in one home is considered one of your rental properties.
If you stay under 5 it has many benefits. Schedule E rental income or Schedule C if you choice to detail out expenses (very useful if doing AirBnB’s or HomeAway). Not bound by ADA or FHA rules. At 5 properties or more you are considered a commerical business in almost all states, thus higher property taxes, more paperwork and tons of codes to follow.
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