Airbnb isn't sharing - Page 2

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

Lee, who toured Airbnb's huge new headquarters space at 888 Brannan with CEO Brian Chesky on March 4, had no comment directly on whether the company was paying — or should be paying — its hotel taxes. Spokesman Francis Tsang would only say: "The Mayor supports the emerging sharing economy and efforts to support it within appropriate regulation to ensure public safety. The Mayor also believes that laws and regulations should occasionally be reviewed for continued effectiveness and application in light of changing technologies and economic/cultural trends."

San Francisco and other California cities have been battling Internet-based companies over the collection of hotel taxes for years. San Francisco, Los Angeles, San Diego, Santa Monica, and Anaheim are together suing Expedia, Travelocity, Priceline, and other companies that do hotel reservations over the issue, with LA County Superior Court Judge Elihu Berle ruling against the cities last month. Appeals are expected in the case.

The issues are different in that case because the hotels are still paying the tax, based on discounted room rates charged after the companies collect their fees. Airbnb, Vacation Rentals By Owner (vrbo.com) and other companies have contested the requirement that they pay any local taxes on their service.

Cisneros told us he made it clear last year through hearings and a ruling interpreting city tax law that Airbnb must pay the Transient Occupancy Tax: "We work very hard to collect all taxes and to make sure everyone is clear on when taxes apply, which is why we did these hearings."

Board of Supervisors President David Chiu has been in negotiations with Airbnb, similar companies, the Hotel Council of San Francisco, and other interested parties to develop legislation to address the "legal grey area" they occupy, as The Economist magazine put it in a March 9 cover story on "The sharing economy."

As I explored in my own investigation last year ("The problem with the sharing economy," 5/1/12), Airbnb's basic business model often runs afoul of city laws (such as the ban on charging guests more than the tenant pays in rent) and private leases (which routinely prohibit subletting of apartments), as well as raising complicated tax, liability, and land use issues.

In high-cost cities like San Francisco that have complex landlord-tenant dynamics, Airbnb can be a way to skirt local protections. New York City essentially banned Airbnb rentals in 2010 and last year went after a landlord for using the service, threatening fines of up to $30,000, according to The Economist.

"The shareable economy has raised many new and complicated public policy issues," Chiu told us. "Crafting legislation on shareable housing spaces has taken longer than expected because of these complications, but we hope to have something in the coming months."

Chiu has staked out a middle ground on the shared housing issue, in the past authoring legislation that challenged the "hotelization" of San Francisco apartments by corporations seeking to get around local tenant protections, expressing hope that his legislation will legalize Airbnb's activities in ways that both its supporters and critics can live with.

Notably, Chiu also differed from Lee on the tax issue when it arose last year. As Chiu told us, "It has always been my perspective that we need to treat Airbnb and similarly situated companies the same as we treat our hotels."

Comments

And they are compounding their evasion with violating their leases.

Of course the city tax office is going to claim this is a kosher tax. In the same way that W claims the invasion of Iraq was also kosher. And just as you no doubt protested W's war and practiced civil disobedience against it, so do ordinary, honest people when the government goes too far and tries to tax them for having a guest in their home.

So far, SF has the good sense to not even try and enforce this miserable abortion of a confiscation. A pox on them.

Posted by Guest on Mar. 21, 2013 @ 3:55 pm

when cisneros concluded that airbnb spots were acting as hotels, what law/ordinance/regulation did he cite as the authority for the city to collect the tax? i'd like to read the text of it to see if i agree.

Posted by Guest on Mar. 22, 2013 @ 9:34 pm

First, it's not a "hotel tax." The tax applies to anyone receiving money above a certain amount from short-term occupants (I believe the threshold is $30 a night). It's a "transient occupancy tax" that is similar to taxes hundreds of communities across the country have enacted. If the tax was unconstitutional in any way, you can bet the largest payors of the tax would have had it overturned by the courts by now since some taxpayers pay millions of dollars of transient occupany tax every year.

The ordinance can be found once you learn how to use a cool website called "google." There are also some links above (and perhaps in the article itself) to parts of the ordinance and to an article on sfgate that discusses the tax and its application to ANY owner/operator of real estate that receives payments from stort-term visitors.

Whether you agree whether the tax should apply to your situation is irrelevant. We don't get to choose what taxes we pay based on whether we agree or not, unless we're looking for problems with the tax authorities. After penalties, interest, and legal fees to fight a tax audit, most rational taxpayers conclude that it's better to pay a tax rather than have the city coming after us for tax evasion. Of course if you want to pay tens of thousands in legal fees fighting the tax, and then pay the back taxes, penalties, and interest, be my guest.

The issue being discussed here is why the city is not aggressively collecting the tax from owners/operators who owe the tax, many of whom are millionaires. Some of us believe the treasurer, tax collector, city attorney, and mayor are looking the other way and not enforcing the tax ordinance since millionaires seem to be treated much differently in this country and city compared to lowly workers who are bombarded with regressive taxes and sky-high rents.

If an owner/operator doesn't want to pay the tax, it's easy enough for them to sell the property to someone who would be more than happy to pay the tax in exchange for having a very valuable piece of real estate in one of the wealthiest cities in the world, located at the crossroads of the booming tech industry and close proximity to multi-millionaires and billionaires from other parts of the world looking to diversity their investments by owning very valuable San Francisco real estate.

Posted by guest on Mar. 23, 2013 @ 5:30 am

jealous much?

Posted by Guest on Mar. 23, 2013 @ 7:47 am

The SF Tax Collector does not have the power to impose new taxes. He only has the power to collect taxes. City taxes may only be imposed by the Board of Supervisors that are elected by the citizens of SF to pass laws. So the SF Tax Collector has attempted to unilaterally impose a new tax on airbnb rentals by simply "reinterpreting" the law and declaring that Airbnb rentals are subject to the TOT.

The Tax Collector tried to pretend that he is only interpreting the law already on the books when he handed down his directive in 2012. But this wasn't just an interpretation of the TOT as it existed. Because if that was the case, then past TOT taxes would be owed by all Airbnb rentals that occurred in the 4 or 5 years prior to the Tax Collector's 2012 directive. Under this new "interpretation" of the TOT law, anyone who rented out a room on Airbnb in the last 4 or 5 years could be held liable to pay back taxes, interest and penalties, and could also be held criminally liable for tax evasion and sentenced to prison.

Does anyone really think that the Tax Collector has that kind of power? Does anyone really think the SF Tax Collector is empowered under the city charter to wield power so arbitrary that he can unilaterally issue proclamations that require citizens to pay taxes on transactions that occurred 5 years ago, as well as interest and penalties, or risk incarceration? Of course he doesn't. And if he did, the law would not pass muster under the U.S. Constitution.

If the city wants to impose a tax on Airbnb rentals, then the duly elected Board of Supervisors should pass a law in accordance with the wishes of the voters that put them in office. That is how a democratic government operates. It doesn't permit one person who holds the office of Tax Collector to unilaterally impose taxes on the citizens of San Francisco.

The Tax Collector's job is to enforce the law and collect taxes; he doesn't have the power to impose tax laws, which is precisely what he tried to do when he "interpreted' the TOT to include airbnb rentals. And that is exactly why the city has not attempted to enforce this bogus interpretation of the law - because if they did, they know they would not be successful in court.

Posted by Guest on Jun. 13, 2013 @ 2:27 pm

It has been quite clear to me from the start here that the SF Tax Inspector was assuming that the hotel tax applies to hosts who rent out their homes (itself far from clear) and then leaping from that to the dubious notion that the city doesn't have to go after those hosts but, rather, can demand that an internet intermediary can oh so conveniently collect that on the city's behalf.

You cannot blame the guy from trying, but the city needs to overcome two important hurdles before this gets anywhere close to a done deal.

Lee understands that, AirBnB understands that, we all understand that, but Tim and Steven hate that Lee is so popular, and see a chance to discredit it even when it is obvious that this will just rebound on them.

What a pair of losers.

Posted by Guest on Jun. 13, 2013 @ 2:50 pm

Airbnb has withheld money owed to me, called customer service & supervisor. They give you no info/policy reference, NOTHING. I have had to search for Brian Chesky e-mail/phone number to no avail. Do you know how to get in contact with him to address my issue with him.

Posted by Guest- Host on Aug. 13, 2013 @ 2:36 pm

I rent out a place in Seattle on Airbnb, VRBO and Homeaway. I charge the 9.5% tax to my guests and pay the state at the end of each month. It does not seem to stop people from renting my place, I average 310 nights per year.

Posted by guest on Feb. 04, 2014 @ 12:06 pm