Cancellation Refund and taxes

According to our cancellation policy, when a guest cancels less than seven days from booking, there will be no refund.

We just had a guest cancel. She was refunded the cleaning fee, which isn’t the problem. They also refunded her the taxes! I called support and was told that that is how it’s done. I tried to explain that I would now be responsible to pay those taxes and added that if they weren’t paid, I’d be charged penalties by state, county and federal. The support person kept repeating that he understands my concern… but that doesn’t fix the problem.

Who can I contact to change this policy of refunding taxes? They kept the service fee but refunded taxes?? If I have several cancellations throughput the year, that could add up quite a bit!

What do we do? How many others have experienced this?

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I don’t understand. Why would you owe taxes on a cancelled booking?

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I don’t get this one. I wouldn’t want to pay tax on something I haven’t had, either.

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I have the same experience. You will notice that they don’t charges taxes on their service fee. The way Airbnb looks at it is that the income you got from the cancelled booking is not from a short term stay. So no taxes need to be charged.

That’s all I have been able to figure out. I go with it. I declare it as income but not for the purposes of paying sales tax or transient accommodations tax.

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The way I see it…

I received the nightly fee bc of the no refund policy. However, along with the cleaning fee, which is fine, Airbnb refunded all the taxes to the guest. Help me see if I’m wrong, but I think that means taxes weren’t paid on the money I did receive.

But I received income from the cancellation… don’t I then need to pay income tax, sales tax, fed tax?

The taxes they charge to the guest are just occupancy and tourist taxes and others as might apply to your location, but not income tax.

Taxes are of course different in different countries and jurisdictions, but as far as I’m aware, and where I live, the taxes guests are charged are Occupancy tax and VAT on the nightly rate.

Income taxes have nothing to do with guests and are the host’s responsibility. In my case, in Mexico, Airbnb withholds the income tax owing from my payout and submits it to the Mexican tax dept.

If you have a cancellation, but still get paid due to your cancellation policy, I would just declare that as misc. income, not a booking that you would owe the Occupancy taxes the guests pay, on.

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Thank you everyone. I feel much better.