Airbnb isn't sharing

Visitors to San Francisco aren't paying the required hotel tax on "shared housing."

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Airbnb has detailed sections on San Francisco and its neighborhoods, none of which mention their customers' tax obligations.
WWW.AIRBNB.COM/LOCATIONS/SAN-FRANCISCO

[UPDATE 3/22: Airbnb owes nearly $1.8 million to the city. Why is Mayor Lee silent?]

steve@sfbg.com

Despite a widely watched ruling last year by the San Francisco Treasurer/Tax Collector's Office that Internet-based "shared housing" companies must pay the city's hotel tax, the high-profile local outfit Airbnb and its hosts aren't routinely charging guests that 14 percent tax.

And while privacy laws prevent the city from revealing any company's specific tax payments, it's possible that San Francisco is getting no hotel tax money from Airbnb at all.

Airbnb allows residents to rent out their apartments to visitors through a web interface. Tax Collector Jose Cisneros concluded in April 2012 that the company and its hosts are acting as hotels, and must pay the city's Transient Occupancy Tax.

But almost a year later, Airbnb's website doesn't include the tax in its booking rates. And local hosts who are partially responsible for paying the tax are being given only vague information about their tax obligations.

Hotels add the tax to the price of a room. But when you book a room on the Airbnb site, there's no category for local taxes and the 14 percent isn't added to the price.

When I inquired about renting an Airbnb room in San Francisco this week and asked my would-be host about the issue, he said he was unaware of his tax obligation and referred me to Airbnb's online policies, which are vague at best. One FAQ specifically about tax issues was answered, "We expect all hosts to abide by local laws, agreements, and other applicable regulations, as outlined in our terms of service," later adding, "We encourage you to work with a legal and/or tax professional in your area to determine how to handle compliance."

For a company that bills itself as an easy way for the average renter to make some spare cash, that doesn't seem to encourage compliance with San Francisco law. Even the civic-minded host who clicks through the "How do I collect taxes for my reservations?" question is given this answer, "You are responsible for managing your tax and other regulatory obligations. If you determine that you need to collect tax for renting in your city, please add the tax amount to the listing price."

We couldn't find a listing anywhere that included the city's 14 percent tax.

In theory, the hosts could be paying that money — but the entire transaction is done through the web, and there's nothing on the site that informs hosts that they need to collect 14 percent. In fact, there's no mention in any of the material about any specific city tax.

It's possible that Airbnb is simply covering the 14 percent out of its profits — but the company only collects 6 to 12 percent of the cost of a room as its cut. So by taking on the taxes itself, Airbnb would be losing money on every transaction.

Greg Kato, the policy and legislative director for the Tax Collector's Office, told us he's barred from disclosing information about Airbnb or any individual taxpayer. So the city can't confirm or deny that the money is coming in. He did say that his office takes the issue seriously: "Just because I can't talk to you about individual taxpayers doesn't mean we aren't enforcing the law....We continue to collect taxes, we continue to audit folks and do investigations."

Airbnb could tell us if it's paying, but spokesperson Kimberly Rubey and local consultants to the company have ignored repeated calls and email inquires from the Guardian about the issue.

Airbnb lobbied aggressively to avoid the tax liability, with the support of Mayor Ed Lee. The mayor's top campaign fundraiser, venture capitalist Ron Conway, was a big early investor in the company.

Comments

peer-to-peer transactions. I believe the disconnect is because Steven knows that many AirBnB'ers are landlords who dare not risk a lifetime sentence of a rent-controlled tenant and so, like me, prefer a turnover of short-term visitors - tourists, conventioneers and the like.

If SFBG wants to expand the gross receipts tax to cover rents, along of course with the ability to pass that thru to tenants, then that might be one compromize solution. But I can guarantee you that no AirBnB'er is going to pay this tax. And it is near impossible for the city to find out about it because, as it should be, what you do in your own home is your business, and not anyone else's.

Posted by Guest on Mar. 20, 2013 @ 3:44 pm

to traditional tenants or short-term ones in order to avoid rent control, is not your home, it is your business. You should pay the tax since you are running a hotel.

Posted by Guest on Mar. 20, 2013 @ 4:05 pm

Yet, there is no law against me renting out a room, or even my entire home, short-term without a license as long as it is not a HOTEL.

Posted by Guest on Mar. 20, 2013 @ 4:47 pm

In other words, a double evader--hotel tax evasion and hotel license fee evasion. Probably an income tax evader as well.

Posted by Guest on Mar. 20, 2013 @ 4:59 pm

denied. I pay income taxes in full on all rentals. But the "hotel" tax is unjust and I will fight it in the long American tradition that derives from the Boston Tea Party.

A home is not a hotel. That's a fairly fundamental distinction.

Posted by Guest on Mar. 20, 2013 @ 5:12 pm

at my home does the city get 14% of the value of the meals too? What if the friend pays for my housekeeper while staying with me?

Posted by Lucretia Snapples on Mar. 20, 2013 @ 5:36 pm

For example, stay with me for free and pay $100 for the parking space.

Posted by Guest on Mar. 20, 2013 @ 6:03 pm

We don't get to choose what taxes we want to pay. But thanks for letting the DA and Treasurer's office know that there are some landlords currently cheating the city out its transit occupancy tax. Let's hope the police and DA raid the AirBnB offices to get a list of all landlords who have used the service over teh past few years and then check the names against tax records to make sure the occupancy tax has been paid. If not, back taxes, penaties, interest, and the city's collection costs should be passed onto the tax cheats. If jail time is not mandated or the tax cheats, the supervisors hould amend the ordinance to add appropriate jail time for the willful tax cheats.

Many of us would love to cheat the government out of part of our tax bills because those taxes fund wars we don't agree with, or because the government gives multi-billion dollar tax subsidies to landlords, or because they give massive tax breaks to multi-national corps that ship jobs outside the US. Yet we still pay our taxes.

Mayor Lee and the Treasurer's office need to get in front of this emerging tax cheating scandal, or the residents should start calling for accountability as to why these wealthy tax cheats are allowed to avoid taxes while the rest of us pay our dutiful share.

Posted by Guest on Mar. 20, 2013 @ 4:55 pm

target for over-reaching city bureaucrats. But the shrewder operators know of that possibility and therefore channel their marketing thru channels that are highly unlikely to be discovered.

For instance, I know onw guy who owns a 4-unit building that he rents out solely thru short-term rentals. He advertizes on foreign websites and has a cosntant stream of overseas visitors paying top dollar for rooms in his building.

Good luck finding that out.

Coming down hard on AirBnB simply means that the business goes undergorund, much like the untaxed sex trade that SFBG has profited from for decades.

Posted by Guest on Mar. 20, 2013 @ 5:11 pm

Many cities require landlord registration, along with annual building inspections to ensure health and safety issues are up to code. Along with registration, a list of all tenants who have lived in the building over the past year would help discover landlords exploiting the local land use and rent control laws, and who might be evading the local occupancy tax. Better yet, when a new tenant begins a tenancy, a disclosure form file with the Rent Board could be required, along giving the tenant a handout explaining many of SF's unique tenant rights and responsibilites.

It sounds like the city family is allowing the wild, wild west to occur when it comes to non-compliant and tax cheating landlords. The DA, Police Department, Rent Board, Tax Collector, and other city family departments need to start addressing this massive tax evasion occurring right in front of their eyes.

Posted by Guest on Mar. 20, 2013 @ 5:45 pm

perfectly normal anyway in the world. Only in SF would someone suggest that is sound policy.

But if you are going to have registration of landlords, then let's have registration of tenants too, with the city on the hook if the tenants default on their rent.

Hmm, don't like that so much, do you?

The problem here is the endless "big brother" interference with personal freedoms.

Posted by Guest on Mar. 20, 2013 @ 6:06 pm

A good way to start means testing so wealthy people are not benefiting from rent control. Cross reference every tenant with both the IRS and CA Dept of Revenue tax database - then further cross reference with a list of property owners nationwide. Eliminate those above $250,000 or who own multiple properties. Then prosecute, jail and sue them. Go back 10-15 years.

Palantir makes a great tool to accomplish something like this. The possibilities are endless!!

Posted by Lucretia Snapples on Mar. 20, 2013 @ 6:17 pm

rules. If you make more than 150K per annum, you lose your rent control. 1040 verification is required.

If we are going to introduce whole new tiers of regulations and registrations, then at least let's make them equitable across all parties.

Posted by Guest on Mar. 20, 2013 @ 6:25 pm

have caused problems in the past with rent, behavior, lease violations or have otherwise proven to be pesky irritants. A hull history of everywhere they have lived, along with annotations by their landlrod, would really help.

It could be included as part of the due diligence that every landlord has to do in an environment where a tenant can be a life sentence. A database of bad prospects would be invaluable.

Posted by Anon on Mar. 20, 2013 @ 6:31 pm

I can't help thinking how much good this proposal can accomplish :-)

Posted by Lucretia Snapples on Mar. 20, 2013 @ 6:41 pm

databases that contain everything about everyone. If some here have their way, 1984 was only deferred.

This is America, right?

Posted by Guest on Mar. 20, 2013 @ 6:56 pm

Cheating on taxes is not a "personal freedom" since it means the rest of us have to pay more, which impinges on our freedoms.

All sorts of businesses are regulated for environmental laws, labor laws, workplace safety rules, etc. When it's clear many landlords are cheating on the SF tax law, then it becomes imperative to use reasonable regulations like landlord registration to ensure health, safety, and tax laws are being followed.

Tenants are not profiting from exploiting the economic system, so they have no need to be registered for anything relating to their tenancy. The landlord has plenty of ways to evict a tenant who does not follow the lease rules. The city needs to ensure landlords are following the rules too. Mandatory landlord registration is a good first step, along with giving every new tenant a handbook summarizing many of the unique landlord-tenant rules that apply in the city.

Posted by Guest on Mar. 20, 2013 @ 6:42 pm

you pays ales tax on what you buy even though it is someone else who makes a profit on selling that item to you.

Rent is just a service that someone sells you and so there is no logical reason why you, the renter, should not pay the tax.

And any non-payment of tax does not mean that you pay more. It simply means that the city collects less tax, which means they spend less, which is very often a good thing anyway.

Moreover, many of the AirBnB'ers "cheating" on this tax are not landlords, but tenants illegally subletting.

As for registration, it is not necessary, and i know of no US city that requires that. But if we are going to spend millions on registration for the sake of it, then let's do it fairly i.e. for both landlords and tenants.

Posted by Guest on Mar. 20, 2013 @ 6:54 pm

I stopped after the first two links. Since it's evident many landlords are cheating on the paying the required SF transit occupancy tax, there's even more reason to require landlord registration, inspection, and occupancy tax audits in SF.

Seattle (2012)
"The Seattle City Council voted unanimously Monday to approve legislation requiring owners of rental housing units to register with the city and undergo inspection to certify that their property meets city health and safety codes."
http://www.bizjournals.com/seattle/news/2012/10/01/seattle-city-council-...

Sacramento (2008)
Rental Housing Inspection Program Outline
•All rental housing units are required to register with the City of Sacramento
•Properties must have a registered local contact representative within 35 miles of Sacramento City Hall
•Property owners are billed the Rental Housing Inspection Program fee of $28 on an annual basis.
•All parcels with rental housing units will be inspected within the first 5-year program cycle
•Properties with violations require the owner makes necessary repairs in 30 days
•Properties with no violations may be eligible for the Self-certification Program
•Approximately 5% of the properties in the Self-certification Program will be audited at random each year
•Owners of properties in the Self-certification Program must perform their own annual inspections and inspect each unit when there is a change in tenant
•Rental housing units that are less than 5 years old or inspected by another agency may be exempt from the program
http://www.cityofsacramento.org/dsd/code-compliance/rhip/index.cfm

Posted by Guest on Mar. 20, 2013 @ 7:33 pm

the city already knows which buildings are rented out because of the rent board fee that is part of the property tax.

Other cites that do not have those rules might feel the need for something else, but it is the building that is the focus, not the landlord.

Anyway, many landlords have agents run the rentals, so it is not clear who you would register in any given case. You have not convinced me of any reason to change the current situation.

Posted by Guest on Mar. 20, 2013 @ 7:52 pm

compliment and agrees that Airbnb is not sharing, but is the renting out of rooms in an equivalent fashion to a hotel or bed & breakfast. Hence, the Hotel (or Transient Occupancy) tax should apply.

The SFASC also notes the efforts of others to ride its coattails to establish alternative campaigns; specifically, the Real San Francisco Anti-Stupidity Campaign. The SFASC commends the Real San Francisco Anti-Stupidity Campaign for using a distinguishing screen name.

Down with stupidity!!!

Power to the thoughtful!!!

Posted by San Francisco Anti-Stupidity Campaign on Mar. 20, 2013 @ 3:44 pm

It is an outrage that the city is seeking to intimidate honest citizens and extort an unreasonably levy on merely being generous with their space.

And it is that reason, and not greed, why nobody is paying this tax.

Posted by Guest on Mar. 21, 2013 @ 7:01 pm

That's a good one.

Posted by guest on Mar. 21, 2013 @ 7:54 pm

tactic for fighting injustice. In the long tradition started by the Boston Tea Party, that can include unjust taxes and an over-bearing government.

Posted by Guest on Mar. 21, 2013 @ 8:06 pm

"being generous with their space" means letting someone stay for free a la couchsurfing. Sharing is different from renting, although you are probably too money oriented to grasp the concept of sharing.

Greed is charging people to stay in your house or rental apartments and not collecting and paying the proper Transient Occupancy Tax.

The SFASC wonders if you are the same commenter who charges people money to transport them in your private automobile.

Down with stupidity!!!

Power to the thoughtful!!!

Posted by San Francisco Anti-Stupidity Campaign on Mar. 21, 2013 @ 7:58 pm

That is not the term anyone would ever use to describe a hotel stay, and so serves to highlight the distinction between someone staying at the Hilton and me inviting a foreign visitor to share my home.

If he pays me a modest consideration for my generosity and costs, that cannot in any way be deemed equivalent to a hotel stay.

While if you want to talk about greed, how about the city abusing it's power to try and take 14% of the generosity of global network of friends? And doing NOTHING in return.

Posted by Guest on Mar. 21, 2013 @ 8:10 pm

stays in a hotel, he or she is renting that room. If you want to get into semantics, consider the following statements.

First, you are not being generous by charging "guests" to stay in your home. You probably have no idea what the word "generous" actually means based on your comments here.

Second, members of the SFASC (and most thoughtful commenters) allow their "global network of friends" to stay in their homes for free for short visits. The people who pay to stay in your house are not your friends, but your customers.

Third, as a thoughtful commenter pointed out, the ""transient occupancy tax' applies to any short-term stayovers where payment of at least $30 a day or $100 a week is paid to the owner/operator," not just to more traditional hotels.

Down with stupidity!!!

Power to the thoughtful!!!

Sharing is free!!!

Posted by San Francisco Anti-Stupidity Campaign on Mar. 21, 2013 @ 8:26 pm

1) Nobody talks about renting a hotel room. There is no lease, no key (in the normal sense of the word). Rentals do not come with maid service or chocolates on the pillow and fresh flowers in the room. The two services are completely different, as you acknowledged yourself earlier in the thread.

2) If you have a friend stay for "free" and then he lets you stay in his Paris home for free, then you still derive an income from that - equal to the value of your Paris stay. Did you declare that imputed income on your 1040? Didn't think so.

3) That's an easy one. If a "transient tax" only applies over $30 a night, then I charge you $29 a night for the bed, and $71 a night for parking your car in my driveway or making you coffee in the morning. Problem solved.

Posted by Guest on Mar. 22, 2013 @ 6:11 am

Guest's comment and ask themselves if they agree that his statements indicate he has no idea about sharing and is just a money hungry greedy bastard.

However, he does seem to know quite a bit about tax evasion.

Down with stupidity!!!

Power to the thoughtful!!!

By the way, the SFASC is out of town on a recruiting trip and is renting a hotel room for the night. The SFASC is a minimalist campaign, so the room has no chocolates or flowers or other frills that Guest can afford because he derives his income from real estate speculation and withholds the proper taxes.

Posted by San Francisco Anti-Stupidity Campaign on Mar. 22, 2013 @ 8:54 am

Will you be taking the hotel to the Rent Board if they decrease the size of the soap in the bathroom?

Posted by Guest on Mar. 22, 2013 @ 9:35 am

I'm not surpised someone who rips off another poster's nom de plume would also think it's okay for some businesses to cheat on their taxes.

If there's no jail time imposed on these tax cheats, the law shoud be changed. And if a business can't follow the tax rules, I can guarantee you they aren't following other rules either.

And find another user name. It was fun for a post or two, but now it makes you look like an overgrown adolescent who can't come up with anything more creative than ripping off the good name of a much-appreciated poster.

Posted by Guest on Mar. 20, 2013 @ 2:51 pm

stolen?

Regardless, your statement is false. I pay my income taxes in gull on my rentals. I consider those taxes to be fair.

I do not pay hotel tax on my AirBnB's because I am not a hotel and I consider the city deeming it as such to be illegal, punitive and confiscatory.

First the city forces LL's into AirBnB by having a ridiculously strict rent ordinance and then, when LL's do the obvious thing, they try and chase them down with this fake "tax".

Shame on the city. And shame on SFBG for supporting such extortion.

Posted by Guest on Mar. 20, 2013 @ 3:06 pm

How does the city decide what a "hotel" is anyway? Are those scuzzy SROs in the Tenderloin considered hotels?

Posted by Lucretia Snapples on Mar. 20, 2013 @ 3:23 pm

a hotel simply because the tax rate on hotels - 14% - is far higher than any other local tax rate I know of.

Posted by Guest on Mar. 20, 2013 @ 3:36 pm

Ah, and now the truth comes out: you are using Airbnb to circumvent rent control and other obligations on landlords in San Francisco. Shame on you. This is one more reason why taxing these transactions is good this city. If you want to operate your apartment as a hotel room and avoid tenant protections, then you should at the very least pay the same tax as other hoteliers.

Posted by steven on Mar. 20, 2013 @ 3:24 pm

are more than 30 days, and so would not in any event apply to short-term lets. Hotels do not have to obey rent control, obviously. Nor do SRO's.

It's simply a choice a property owner makes. Do you rent long-term, and risk getting a Marcos, Greg or Lilli who will endlessly whine about their "rights" and who will squat and never leave? Or do you welcome foreign visitors to our city, worry about none of that, and make a cool $100 a night or more?

No brainer, and it is all of the fault of the very city policies that you support. What have you wrought, Steven? AirBnB's and Ellis Act evictions. You must be so proud.

Posted by Guest on Mar. 20, 2013 @ 3:40 pm

The investigations must also include locating tenants who rent rooms on AirBnB in violation of their leases. Evidence of such lease violations would be grounds for eviction.

Posted by Guest on Mar. 20, 2013 @ 4:22 pm

discover the lease violation as that is grounds for eviction.

But that isn't a tax issue at all. Steven was not complaining that people do AirBnB - only that the tax that he claims applies is not being collected.

Posted by The real Real SF Anti-Stupidity Campaign on Mar. 20, 2013 @ 4:50 pm

that a casual room rental is a hotel (clearly a ludicrous assertion) to where it is more a fine for landlords who choose to rent via AirBnB rather than risk getting a "lifer" as a tenant".

As such, Steven's agenda becomes clear - he wants to punish anyone who owns property and who isn't stupid or a masochist.

Posted by Guest on Mar. 20, 2013 @ 5:06 pm

until morale improves.

Posted by Lucretia Snapples on Mar. 20, 2013 @ 4:59 pm

but investigate who might be sleeping at whose house.

That way, madness lies.

Posted by Guest on Mar. 20, 2013 @ 5:07 pm

other than more money. I wouldn't be surprised to find out if hotel owners in San Francisco are also demanding an "investigation." This just seems like a giant loser for everyone all around. If the city moves forward it will be sued, which will cost more money, which will spur further attempts to force people renting out a bedroom to pay 14% of that to the city and on and on.

Posted by Lucretia Snapples on Mar. 20, 2013 @ 5:34 pm

since there was never any clamor to tax this before. It was only when property owners started using short-term lets as an end-run around rent control that people like Steven started demanding tax. Yet short-term lets have been going on for decades.

I agree that the city will eventually get sued if it ever gets serious about trying to tax homes like hotels. Perhaps that is why they currently do not bother to enforce this.

Posted by Guest on Mar. 20, 2013 @ 6:02 pm

I rent a 2-bedroom flat for $3,000 a month, and then use AirBnB to rent out the second bedroom for $50 a night to tourists thru AirBnB, i.e. 50%.

Do I have to pay 14% of that $50 each night? Why? There is no profit there, any more than when a master tenant sublets to a sub-tenant.

And if not, how would AirBnB know which case applies?

Posted by Guest on Mar. 20, 2013 @ 6:12 pm

If Airbnb was complying with the city's ruling, it would simply tack on $7 per night at the time of the booking, making it clear to both sides that it was for the city's Transient Occupancy Tax. The company would collect that money and pay it to the city on a quarterly basis and you wouldn't need to worry about it. Do you really think it would affect your situation if your guests paid $57 instead of $50?

Posted by steven on Mar. 21, 2013 @ 9:16 am

all the basic laws of economics were repealed overnight while I was sleeping.

And the point of my example was that, in that case, there is not profi. I am paying $100 a day for my 2-bed flat, and charging half of that to my overnight guest, in much the same way as i might charge the equivalent to a roommate.

You are making no distinction between a 1000-room downtown Hilton hotel and a tenant occasionally having the odd paying guest in his spare bedroom. Even SFASC gets those two are not the same and should not be treated the same.

Posted by Guest on Mar. 21, 2013 @ 9:25 am

about all the business they would lose. But when it is a group he doesn't like, then that same 14% makes "no difference".

Posted by anon on Mar. 22, 2013 @ 6:05 am

The real money changing hands through Airbnb transactions in SF comes from the short-term rental of in-law apartments. An owner gets $200 or more a night for a facility that includes bathroom and kitchen. In a long term rental the owner gets $2500-3000 per month. With Airbnb the owner gets @ 6000 per month for that in-law apartment. You can make all the fine hair distinctions about homes vs. hotels and you know what? Ron Conway's big butt would still be resting on Ed Lee's small head!

Posted by Apthorp on Mar. 21, 2013 @ 1:48 pm

a long-term rental AND no longer have to worry about rent control either, then it is a no-brainer to do the short-term thing. Even Steven accepts that logic and knows nothing can be done about it.

He instead appears to want to settle for collecting a punitive 14% tax on that by trying to get the city to enforce their dubious interpretation that such an arrangement constitutes a hotel - an assumption that has not been tested by the courts and which would very likely be bounced if and when that ever happens.

If you really want to reduce opportunistic short-term rentals, then the obvious answer is to make long-term renting more attractive and appealing which, under rent control, it is not.

Posted by Guest on Mar. 21, 2013 @ 2:05 pm

Do some people cheat on their taxes? Of course. So it surprises no one that some (most?) landlords are cheating the city out of tax revenue for the transient occupancy tax.

But at least be honest about the tax. There is nothing in the ordinance language that limits the tax to "hotels" only since it's a "transient occupancy tax" that applies to any short-term stayovers where payment of at least $30 a day or $100 a week is paid to the owner/operator. As mentioned earlier, the title of a law has no bearing on how a law operates or to who it applies. The ordiance is very clear after the update from the Treasurer's Office: the tax applies to any payments received over the threshhold for short-term transient stayovers, unless an exception applies.

Let's hope the DA's office is working on prosecuting as many of the tax cheats as possible, and that the city is implementing reporting and regulatory mechanisms to inform landlords/operators of their responsibility for the tax, with appropriate follow-up prosecutions for willfull non-compliance.

Posted by guest on Mar. 21, 2013 @ 2:33 pm