Airbnb says its hosts should pay taxes

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AIRBNB

Under pressure in San Francisco and New York City for violating local tenant and land use laws and refusing to pay local taxes, Airbnb has finally acknowledged that transient occupancy taxes apply to the room rentals it facilitates. But the company still hasn't taken any steps to collect the tax or admitted that it shares this tax debt with its hosts.

"Our hosts are not hotels, but we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds," CEO Brian Chesky wrote on the Airbnb blog on Oct. 3, addressing the post to New York City and not San Francisco, where it is headquartered and where we have shown the company is shirking an annual tax debt of nearly $2 million.

Contacted by the Guardian, a company spokesperson extended the pledge to San Francisco, writing, "Yesterday, our CEO Brian Chesky announced that we believe it makes sense for our community of hosts to pay occupancy tax to the cities in which they live, with exceptions under certain thresholds, and we are eager to discuss how this might be made possible. We have been in substantive discussions with Board President David Chiu on these issues for some time, and we'd like to thank him for the open dialogue that helped lead to today's announcement. We look forward to continuing our work with him and others in San Francisco to set forth clear, fair laws that allow regular people to rent out their own homes, while giving back to the city that makes it possible."

As the Guardian has repeatedly reported, most recently in our Aug. 6 cover story "Into Thin Air," the San Francisco Treasurer/Tax Collectors Office has ruled that the city's TOT of about 15 percent applies to Airbnb guests, and that Airbnb shares that joint tax liability with its hosts.

The ability of individual hosts to receive business licenses for renting out rooms and to collect and remit the TOT is complicated by the fact that such rentals violate land use, tenant, and other city laws — and Chiu has been developing legislation that would legalize and regulate the stays.

Airbnb could easily collect the TOT on each San Francisco transaction, as some of its online competitors have already been doing, but it has so far refused to do so. And when the Guardian asked Airbnb whether it now plans to include the tax in its transactions, the company ignored the question.

In fact, Airbnb's public statements and private communications indicate its intention to pass the buck to its hosts rather that paying the tax liability itself, and several hosts who commented on Chesky's blog post expressed hopes they would get more support from the company.

Nonetheless, Chiu took the Airbnb's statement yesterday as a positive sign, telling us, "I am pleased to hear that Airbnb has acknowledged the need for their users to pay the occupancy tax. This policy was developed as a result of discussions that I've led in the past year to regulate and tax shareable housing activity in San Francisco. While we continue to negotiate with shareable housing companies, housing advocates, and the Mayor's Office to find sensible solutions, I am confident that we will be able to move forward on a regulatory framework that provides flexibility to residents, protects our affordable housing stock, and collects the fair share of taxes for the City. I look forward to introducing legislation in the coming months."

Comments

obligations of hosts who do not freely declare the tax they allegedly owe.

Sure, the SF tax inspector says they should, but then of course they would, it's easier for them.

Until a court rules, AirBnB should just sit tight, and the SF tax collector should do what he is supposed to do - identify and collect the taxes that he thinks that "hotels" owe.

Posted by Guest on Oct. 08, 2013 @ 3:20 pm

The Tax Collector's Office regulation, which interprets the Tax Code and itself has the force of law, says, "A website company, or any other person acting as merchant of record who receives rent in connection with an occupancy transaction, is an "operator" who is responsible for collecting the TOT owed by the occupant and for remitting the TOT to the City."
Courts don't have to validate laws, they simply rule on challenges to laws, and Airbnb hasn't challenged this law in court, it's simply ignoring it. Laws can also be changed by the legislative process, and Airbnb hasn't tried to do that either, correctly surmising that they would lose given their flimsy argument and the forces arrayed against them.
You can choose not to believe it -- just like you can choose to believe the Earth is flat -- that doesn't make your belief true.

Posted by steven on Oct. 08, 2013 @ 4:45 pm

tells me that they are not confident that this "opinion" of the tax inspector will pass muster if challenged. So instead the city is trying to negotiate a compromise, which most people think is preferable.

The fact that AirBnB is based in SF should not disadvantage them vis-a-vis their competitors who are based elsewhere, and where SF has no jurisdiction.

The idea solution would be for SF to collect from the hosts, and perhaps airBnB would be willing to furnish some info to help with that, rather than perform free and onerous tax collection when it's not their job.

Posted by Guest on Oct. 08, 2013 @ 5:29 pm

How exactly would the SF tax collector enforce his opinion that they owe the tax?

And if you admit that they could not, then isn't it true that AirBnB is being picked on only because they have chosen to invest in being here rather than elsewhere?

Posted by anon on Oct. 08, 2013 @ 5:43 pm

>"Courts don't have to validate laws, they simply rule on challenges to laws, and Airbnb hasn't challenged this law in court, it's simply ignoring it."

No, that's not the way it works.

First off, the city is also ignoring their opinion and there is no indication that they have tried to enforce it in the year and a half since they made it.

So AirBNB hasn't faced any damages from the city's opinion. The judge would tell them to come back when the city tries to enforce it.

You can't go to court and say "Hey! I don't like their opinion that they have made effort whatsoever to enforce".

Posted by Guest on Oct. 08, 2013 @ 6:50 pm

Good. Let's have elected officials require landlords AND Tenants all report all rentals. All or nothing. Then we'll see how fast the Tenant's Union will fight accountability. They want landlords to be brandished as "pigs", while they believe tenants have a right to make money off property they do not own and harass landlords even when they know they would lose in court. Then, when landlords are forced to never bend in sticking with the letter of the law, or ask for max rent (since they know otherwise their rent will barely go up perhaps over the next thirty years), they claim the landlord is "being greedy". it's why most property owners sell, or do not rent and greatly contributes to high rents. Of course, Means Testing is the solution, so the people who warrant rent control get it, and not the maybe 60% who take up apartments now and would never qualify under means testing for a rent controlled apt. That is the source of a lot of why rents are so high. Sorry, Some $300K google employee, or long term renter with a rental house in Sausalito, or resident who works outside the city, shouldn't have rent control.

Posted by Ray on Oct. 14, 2013 @ 7:58 am

six-figure earning tech and finance workers don't get a rent subsidized by a hard-working mom'n-pop property owner for a lifetime.

Or else abolish rent control and replace it with a local program based on Section 8 housing vouchers.

Posted by Guest on Oct. 14, 2013 @ 9:48 am

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