Into thin air - Page 7

"Shareable housing" is causing apartments to vanish from SF's rental market — yet popular, profitable sites like Airbnb violate local laws


Teo said a TOT field has been included in Roomorama's price template from the beginning since the vast majority of the site's listings are "professionally managed properties, people that are actually licensed to run short-term rentals. They'd already been paying and collecting these taxes....One of the first things that was requested was a way to collect."

Teo also said that if Roomorama, as an operator, was deemed responsible for collection and remittance of taxes, it wouldn't be "difficult from a logistical standpoint. It would add more work to our load but, to be honest, most of it is automated anyway. Once we put in the mandatory tax field, it would simply be paid the same way a consumer pays when they eat at a restaurant."

She's unsure why Airbnb has been so reluctant to address the tax issue head on, but "if I could venture a guess," she said. "I'm guessing it's because they work more with the occasional host, and that makes their value proposition a little bit less appealing."

Other industry competitors include Craigslist and VRBO, both founded in 1996, and VRBO's parent company, HomeAway. All three share a similar business model and one that's considerably different from Airbnb's — they are not financial gatekeepers in the transaction between guest and host. At their essence, these sites are little more than digital classified ads.

No competitor comes close to the market share that Airbnb has captured in San Francisco and globally. In New York, Roomorama has 2,688 listings compared with Airbnb's 25,724, despite its questionable legality there. In San Francisco, Roomorama hosts 303 properties and VRBO features 1,123 — and Airbnb has about 4,750 throughout the city.

Airbnb's statement to us touted that financial impact: "We are proud of the $56 million that Airbnb's users generated for the San Francisco economy last year. The vast majority of Airbnb hosts share the home where they live, and more than half directly use their Airbnb income to pay their rent or mortgage."



When the San Francisco Tax Collector's Office discussed the matter last year and issued "Tax Collector Regulation 2012-1: Tax on Transient Occupancy — Multiple Party Transactions; Occupancy of Private Residences," it made clear Airbnb should be collecting the tax as it processes the transactions.

"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. Any person receiving such rent shall provide a receipt to the occupant. Such receipt shall include a separate line item specifically identifying the TOT," reads the regulation.

While it's also true that the city tax codes make Airbnb and its hosts jointly liable for the tax debt — which the company's apologists have used to accuse the Guardian of unfairly picking on the company in an avalanche of online comments —it would be a regulatory nightmare for the city to go after thousands of individual hosts, most of them small-time tenants who don't even have business licenses.

Fajardo is diligent about compliance, but she can afford to be. She works with a team that includes assistants and an accountant and she does it full-time. She is not the casual homeowner supplementing her income (and it's unlikely many of her clients are either) — she is an entrepreneur. And even she admits to having found the TOT difficult to interpret.

Fajardo contacted the Guardian in June in response to our coverage of Airbnb, citing the city's complicated tax system and the difficulty that small users have in paying the TOT, which has varying fees tacked onto the base rate of 14 percent. (Although she also wrote, "We collect and pay sometimes as much as $10,000-20,000 per quarter.")