Airbnb makes small admission on tax issue, saying its hosts should pay

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Airbnb creates pages for each major San Francisco neighborhood, but it won't charge guests the taxes they owe.

Under pressure in San Francisco and New York City for violating local tenant and land use laws and refusing to pay local taxes, Airbnb has finally acknowledged that transient occupany taxes apply to the room rentals it facilitates. But the company still hasn’t taken any public steps to collect the tax, nor has it admitted that it shares this tax debt with its hosts.

“Our hosts are not hotels, but we believe that it makes sense for our community to pay occupancy tax, with limited exemptions for those who earn under certain thresholds,” CEO Brian Chesky wrote on the Airbnb blog yesterday, addressing the post to New York City and not San Francisco, where it is headquartered and where we have shown the company is shirking an annual tax debt of nearly $2 million.

Contacted by the Guardian, a company spokesperson extended the pledge to San Francisco, writing, "Yesterday, our CEO Brian Chesky announced that we believe it makes sense for our community of hosts to pay occupancy tax to the cities in which they live, with exceptions under certain thresholds, and we are eager to discuss how this might be made possible. We have been in substantive discussions with Board President David Chiu on these issues for some time, and we’d like to thank him for the open dialogue that helped lead to today’s announcement. We look forward to continuing our work with him and others in San Francisco to set forth clear, fair laws that allow regular people to rent out their own homes, while giving back to the city that makes it possible."

As the Guardian has repeatedly reported, most recently in our Aug. 6 cover story “Into Thin Air,” the San Francisco Treasurer/Tax Collectors Office has ruled that the city’s TOT of about 15 percent applies to Airbnb guests, and that Airbnb shares that joint tax liability with its hosts.

The ability of individual hosts to receive business licenses for renting out rooms and to collect and remit the TOT is complicated by the fact that such rentals violate land use, tenant, and other city laws -- and Chiu has been developing legislation that would legalize and regulate the stays.

Airbnb could easily collect the TOT on each San Francisco transaction, as some of its online competitors have already been doing, but it has so far refused to do so. And when the Guardian asked Airbnb whether it now plans to do so, the company ignored the question.

In fact, Airbnb’s public statements and private communications indicate its intention to pass the buck to its hosts rather than collect and pay the taxes itself, and several hosts who commented on Chesky’s blog post expressed hopes they would get more support from the company on the myriad issues that complicate its simplistic business model.

Nonetheless, Chiu took the Airbnb’s statement yesterday as a positive sign, telling us, “I am pleased to hear that Airbnb has acknowledged the need for their users to pay the occupancy tax. This policy was developed as a result of discussions that I’ve led in the past year to regulate and tax shareable housing activity in San Francisco. While we continue to negotiate with shareable housing companies, housing advocates, and the Mayor’s Office to find sensible solutions, I am confident that we will be able to move forward on a regulatory framework that provides flexibility to residents, protects our affordable housing stock and collects the fair share of taxes for the City. I look forward to introducing legislation in the coming months.”

 

Comments

Any sizable business sells to customers all over the world, yet somehow they manage to comply with the local tax rules wherever the sale is transacted. It appears only Airbnb hires stupid people who can't figure it out. Got it.

Posted by Guest on Oct. 08, 2013 @ 8:42 am

Any chance that you can name ONE software system that handles TOT occupancy taxes in 40,000 cities all over the world?

One?

I know it's easy to just say that it exists. But if you knew what you are talking about you would be able to come up with one name.

Thanks!!!

Posted by Guest on Oct. 08, 2013 @ 9:07 am

Suppose AirBnB's biggest rival in based in Bulgaria. How are you going to collect the TOT? The Bulgarians will just give you the finger.

And why wouldn't AirBnB relocate their business to Bulgaria if SF's policy unfairly discriminates against them?

Local taxation becomes meaningless unless the entity that owes the tax is here as well. The host is; the website, not.

Posted by Guest on Oct. 08, 2013 @ 9:13 am

As I wrote about in my cover story and referenced in this post, Roomorama is a competitor of Airbnb with a very similar business model (charging guests, taking its cut, then paying the hosts) and it manages to collect and remit the TOT in San Francisco and other cities. The CEO of that company told us how easy it is to do and that he's surprised Airbnb doesn't do so. 

Posted by steven on Oct. 08, 2013 @ 11:23 am

than a rather self-serving allegation from someone as biased as you.

In any event, since you admit it is a joint responsibility between the intermediary and the host, then both systems seem viable. In some cases, the intermediary withholds and pays the tax. In other cases, as with sales tax, the tax authority goes after the individual.

Each intermediary should decide for itself.

Posted by Guest on Oct. 08, 2013 @ 11:34 am

No, sorry, Roomorama doesn't remit the taxes like Steven says, they just collect a tax recovery charge based on parameters supplied by the host and they forward that amount to the host, who then is responsible for remitting. Exactly like Expedia, Orbitz, etc...

Big difference from what Steven is saying.

Here is the form that Roomorama hosts use to set up rentals:

https://roomorama.desk.com/customer/portal/articles/308876-how-do-i-chan...

It specifically tells the host:

- Tax (Please input the subtotal amount for the Taxes)

So how could Roomorama take responsibility for remitting the tax if they let the host set the rates? Who is responsible if the host gets it wrong?

Also, I looked at 5 rentals in San Francisco and only one of them even listed a tax.

Steven is just confused and heard what he wanted to hear.

Posted by Guest on Oct. 08, 2013 @ 12:34 pm

I think Tim had a basic understanding of finance. At least he had the sense to buy a home and marry a lawyer anyway. Steven means well and his heart is in the right place, but he just doesn't have the intellectual prowess to play with the big boys.

Posted by Guest on Oct. 08, 2013 @ 1:04 pm

Below is a link to a sfgate article in today's paper about Airbnb's multiple legal violations in NYC. As usual, the article doesn't mention that SFBG has been much more informative and comprehensive in its reporting about this issue than the Chronicle.

The story mentions the substantial health and safety violations found at numerous short-term rentals. The story also mentions the high potential for criminal elements staying in apartment buildings without any sort of due dilgence of the short-term renters, including any investigation of prior criminal convictions and child molestation charges. I'm surprised there hasn't been a major assault or murder reported involving an Airbnb renter, with multi-million dollar payouts by NYC or SF for their failure to properly regulate these short-term rentals.

The article points out that NYC has been investigating these short-term rentals since 2006, just as SF has been "investigating" these issues for a very long time. It appears the politicians are a major part of the ongoing criminal enterprise by not issuing cease and desist orders on Airbnb ((and similar companies) and issuing arrest warrants on Aurbnb's officers for failure to stop their on-going criminal activity.

At this point politicians such as Mayor Lee and Supervisor Chiu are part of this criminal enterprise by dragging their feet for so long over regulating these rentals and allowing potential criminals to stay in SF apartment buildings. Treasurer Cisneros and DA Gascon are also derelict in their duties by not filing lawsuits to recover hotel tax monies and indicting the officers of Airbnb for willfully flouting SF laws.

What does it take for politicians to stand up and take action, including lawsuits enjoining illegal behavior? Why should anyone follow any laws when large corporations are allowed to willfully ignore the laws while extracting wealth from cities like SF and NYC without paying applicable transient occupancy taxes? San Francisco politicians and bureaucrats are as much part of the problem as the owners and officers of companies that take advantage of the tax-paying residents of SF. Let's hope the politicians finally get off their asses and do something constructive before there are murders, rapes and child molestations by some of the thousands of unregulated, unvetted Airbnb renters.

http://www.sfgate.com/news/us/article/NY-fights-site-listing-homes-for-t...

Posted by Guest on Oct. 15, 2013 @ 6:07 am

endlessly crowing about. H&S rules apply regardless, but SFBG has been whining because it doesn't like homes being diverted from rent-controlled use to temporary use.

I have converted several units to short-term use in SF, not just because the rents are better, but more because it frees me from the insane constraints of rent control.

And I was doing that before AirBnB, via CraigsList, so the AirBnB role in this trend isn't critical, just convenient.

Posted by Guest on Oct. 15, 2013 @ 6:35 am

Silicon Valley companies have been very successful at learning how to minimize corporate taxes with very creative uses of foreign corporations to avoid US and CA taxation, but it looks like they now want to take it one step further and avoid the heavy hand of government regulation and taxation altogether.

It's pretty funny that an entire industry of computer and software technology largely created from heavy Department of Defense subsidies in the 1950's and 1960's to companies such as Fairchild, Texas Instruments and National Semiconductor has led to a call for "revolution" by the new wave of techies who want to secede from government altogether. Oh, the irony.

"We need to build opt-in society, outside the US, run by technology..."

I say let them go. The US must have an island or two in the South Pacific it can give to the leading Silicon Valley behemoths. They can take all of their tens of thousands of top talent and high earners with them. San Francisco and the Bay Area will be much better off when they're gone.

They can even take economic displacement apologists like Ed Lee and Gavin Newsom with them as political leaders worthy of comparison to George Washington himself.

http://nymag.com/daily/intelligencer/2013/10/silicon-valleys-secessionis...

Posted by Guest on Oct. 22, 2013 @ 9:47 am

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