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Taxes: Air should be collecting everywhere!

So, a few months ago when I was collecting info on tax collection in my county I remember it clearly saying something along the lines of “hotels, motels, B&Bs and online rentals like AirBnb”. When I went to print the forms today for this quarter (and my first time) I didn’t see AirBnB listed this time. And since I had questions on how to fill in the form anyway, I called the county. They said that since I do not collect the money from the guests, it is not my responsibility to pay the taxes. They’re currently in a “battle” with Air to get these taxes remitted, but currently I shouldn’t pay anything (so yay, at least for now I get to keep several hundred dollars).

They did warn me though that Air may come to me to collect that amount in the future, so yay, I bet they will. So I guess I’m glad that I’m not having to pay taxes that my competitors aren’t. But this just goes to show that Air should be collecting these in all locations, but they aren’t until they’re being forced to. And that since they don’t have any real investment/property in the game, they’re not caring about legalities. They’re fighting it because “we’re not a hotel/motel”. But they are collecting the payment for transient lodging.

Collecting it’s costing Air bnb time and money so easy to understand why they are trying to avoid it

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I would agree to that if it wasn’t for the fact that they DO collect the taxes in most places. If a guest shops for rooms in DC - just a 1/2 mile down the road, they will get a rate of $100 but in the end pay the $100 plus the tax. At my place they will pay the $100 but I have to collect the tax in cash.

@Sarah_Warren - that is very interesting!!! I collect the taxes from my guests - sales and occupancy - then submit the forms and payment every month. @konacoconutz and some others do it the same way. There are many horror stories of hosts being billed for 10s of thousands of dollars in back taxes. Be careful!!

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In STL, since I don’t collect the payment, they specifically said it is not my responsibility to pay the taxes, but I should hold onto that money and be ready to give it to Air if Air tries to collect it from me. But since I am not the one collecting the payment I am not the one responsible for paying the taxes under the current wording of the law. I do need to collect it though for direct bookings. So I’ll hang on to the money I had collected in case Air tries to direct collect it from me, or to cover any shortages in future payments.

Thankfully right now it’s a fairly minuscule amount, lol.

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Actually I disagree with you. Air ACTIVELY campaigns and lobbies to be allowed to collect. When the bill was introduced to collect here in Hawaii, they went on the offensive. They sent us multiple emails to get us to write our legislators to state we wanted collections. They traveled here to testify. They did everything short of bribing politicians (maybe they did that too :smiley: ) to try to pass it.

Think about it. They collect tax and it legitimizes them!!!. It’s in their best interest to collect!

It’s not really a bookkeeping nightmare for them because all they do is send in one big payment en masse. On your own tax return you simply report the tax and say it was exempt.

It did pass both the house and senate but the governor vetoed it because the bill was too half baked and didn’t have a way to address the many many illegal rentals on Oahu and Kauai. On the Big Island all vacation rentals are legal.

It will be reintroduced next session and you better believe Air will be lobbying hard again.

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I actually would be careful too and not exactly trust what one county worker tells you on the phone.

btw Air will never come and collect it from you.

Edit…l meant to address Sarah.

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I think they’re fighting it on the context of the current wording of the statute: “hotel/motel/b&b”, saying we don’t fit in that? And probably fighting the back payments. And since it’s currently in legal process and I don’t collect the payments I’m currently exempt? It was an interesting call, but she definitely told me not to pay because they’re currently in negotiations with Air as they’re the ones who collect the money from the taxpayers and should have a tax collection line.

might be different in each state. I think Air will always fight having to release its private client info to municipalities for tax compliance. That is a good thing.

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And I think that’s part of it. I also think they don’t want to be the one collecting and paying the tax. They want me to collect it under a tax line and pay it.

But that is different from every other place where they collect. They add it to the guest total and you never see it or worry about it, thank god. You fill out your returns as usual with an exemption stating it was collected by Air.

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Then I wonder what the stink is in STL…

Might be that the city is demanding Air release their records and they don’t want to?
So it could be a multi-layered fight we don’t know much about.

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I don’t the know the laws in your county or state but I would be very careful about what a county worker says. I also don’t know if it is illegal to collect lodging tax and not remit it…even if the county says you are not required to turn it in. I am not sure what the “terminology” is but I have heard that some states will waive all late penalties, etc. if a person comes forward and says they didn’t realize they were supposed to be collecting and remitting lodging tax. Then they pay all the back taxes penalty free. While I understand this is not exactly your situation…I would want to get rid of the taxes now - just in case they later decide to impose fines.

Are you familiar with the way Flipkey functions? They too hold guest’s money until after check in; however, they just pass along the tax amount to the owner for remittance. The same goes for Homeaway’s system - it doesn’t matter if owners on the commission model or the subscription model.

I think I may know where your county is coming from, but it depends on the laws. In NC the “facilitator” (Air, FK, HA) is required to give the owner the amount of taxes collected from the guest - this is to be done within a certain amount of days. IF this IS NOT done, then facilitator becomes liable for the taxes. So in essence, NC kind of took the same stance. If Air is not willing to put in a tax line and remit the taxes to me within such and such time - then Air becomes the responsible party.

However, only the state clarified this, not my county. My county rep. (I know her by name) danced around the issue. And kind of insinuated I would be held responsible. But my county follows same laws as the state. So that wouldn’t be correct. I told my county rep. that I would continue to collect in cash, and submit monthly along with the tax collected from all my other bookings.

The one issue that came up though was the lodging tax on the booking fee collected by Air. NC charges lodging tax on everything - not just the rental rate and cleaning fee. This includes the booking fee too. So if a guest pays $100 booking fee, then they also will pay $11.75 tax on that amount. The rep. told me since Air does not remit to me the booking fee, then it was clear that I had no responsibility to collect.

Honestly, I would try to get something in writing that you are not, were not responsible for any past Air reservations, and find a way to remit that tax. Or you would need to send it back to the guests. I just cannot see how Air would have any authority later down the road to demand back payment from you. If Air is the responsible party then they will be required to pay the back taxes.

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What do you mean by “STL”? - short term lease, state law, short term lodging??

I never “collected taxes” from my guests thankfully. I toyed with the idea of collecting in cash, but decided to just eat it myself since it’s 7.5%. I’ve set aside that money, but since it’s only $232 dollars and one quarter, I’m going to wait and see what happens.

STL - St. Louis

Hawaii is definitely different from this. Should they collect, it would be from the guest, not as a line item (which also gets commissioned and tax… so tax on top of tax?)

Right now, Airbnb collects the wholesale HAwaii excise tax from the guest on THEIR commission from the booking. This has nothing to do with US.

Should they decide Air can collect, they would collect the following:

–Excise @ 4.167%
–TAT @ 9.25%
–Excise on commission @ .005% (wholesale)

The guest would pay!

Edit-- This is for Hawaii Island only. Oahu pays more because they are trying to build a light rail. :smile:

Oh I see. Well then I would try my best to get in writing from the county person that you were not held responsible. So strange that it said online rental like Airbnb but does not now. Does she have a specific law to quote?

Or if you want to post your county here I can see what I can find myself. Sometimes it can be buried quite deeply. I know many people that did not collect cleaning fee taxes…some in my own area do not. But they are confusing taxing “labor” with taxing the full cost of the rental. After all, none of us would rent out our places if the guest did not pay the required cleaning. I’m not saying that some states “might” view cleaning as labor that is not taxed. But often times only certain types of labor are exluded, it is not 100% across the board. I have heard people say their CPA, or accountant advised them. But I warn people against just blindly going by what your CPA says. CPAs, doctors, attorneys, etc. are not all 100% schooled in every single type of situation.

You will hear some CPAs advise to file schedule E, while another CPA will advise to file schedule C and pay self-employment tax. This is regarding the exact same scenario.

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Mine wouldn’t let me do a C. In retrospect good because I want to try a HARP refi soon. You can’t have your tax returns tainted with the words Airbnb STR anywhere. :smile:

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But won’t Schedule E show up as “rental income” anyway?

I don’t think anyone should be listing they are some sort of independent contractor for “Airbnb” but should only list “self- employment” income because that is what it is - unless of course it is qualified as Schedule E income. I don’t know what else is noted though as far what the “self - employment” is when filling out refi paperwork.

When I read the tax law, it is clear to me that my partner should be filing his rental income under Schedule C. His enrolled agent files under Schedule E, and since my partner doesn’t question him then I say “well it is your taxes, not mine.”

Airbnb collect taxes for Montgomery County, Maryland.

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