ONLINE STAY-SHARING giant Airbnb is taking fire from two national hotel associations for activities in two states. In Florida, AAHOA has filed a petition saying the company’s tax agreement with the state is improper, while in New York the American Hotel & Lodging Association is accusing it of failing to stop an illegal scheme to avoid lodging taxes and oversight.
Both associations have been pressing for further regulation of Airbnb and similar services for some time now. In the two current incidents they again accuse the company of engaging in or allowing unfair marketing practices, charges the company dismisses.
The Florida petition
AAHOA’s case focuses on Airbnb’s voluntary tax agreement (VCA) with Florida that it claims in a petition with the state’s Division of Administrative Hearings violates proper approval process and public disclosure rules defined by state law. The association has about 1,100 members in the state.
“Airbnb negotiated its secretive agreement with the state of Florida behind closed doors with no opportunity for public input and zero transparency,” said Rachel Humphrey, AAHOA’s interim president and CEO. “While traditional lodging providers adhere to strict tax collection and remittance laws, the VCA essentially allows Airbnb to operate under their own honor system with no way to verify whether they are collecting and remitting all applicable taxes.”
The VCA also prevents the state and local governments from obtaining detailed information needed to verify tax collection. The Associated Industries of Florida also is protesting the Airbnb VCA, extending its concern to the online marketplace in general and saying “taxes are not ‘voluntary’”.
“Online lodging marketplaces operating in our state can benefit the economy, but the appropriate short-term rental tax system would require these online marketplaces to collect and remit all applicable hotel and lodging taxes in a fair and transparent fashion,” said AIF spokesman Brewster Bevis.
The petition also insists that Airbnb be subjected to the same robust audits by the state’s Department of Revenue to which hotels submit. Under the VCA all government audits can only use anonymous user data, and state and local tax agencies are not allowed to share information.
“This makes it impossible to identify owners of illegal rental listings or rentals that are not complying with existing regulatory laws,” AAHOA said in a statement. “It also only calls for aggregate data on gross rent and tax due to be reported to state and local governments, which is not enough to ensure they are collecting all applicable taxes.”
In other words, Palm Beach County Tax Collector Anne Gannon said, Airbnb is essentially operating on an honor system.
“Florida’s taxpayers and communities are potentially being shortchanged if these short-term rental marketplaces are not collecting and remitting the full amount of taxes owed,” she said.
In a statement, Airbnb dismissed AAHOA’s petition as a “publicity stunt.”
“We are quite surprised that the Washington, D.C., hotel lobby would impugn the integrity of the Florida Department of Revenue and its authority over the tax process,” the statement said. “Airbnb is a leader in this space and worked collaboratively with DOR to collect and remit $62.5 million in state sales revenue in 2018. In this case, attacking a well-respected state agency is nothing more than a publicity stunt.”
Charges of an ‘illegal hotel’ in New York
In the New York case, AHLA’s statement revolves around information uncovered in a New York Times article on a supposed scheme using 100 misleading host accounts and 18 corporations to run what AHLA called an illegal hotel business in Manhattan. The purpose of the scheme, perpetrated by a third party through Airbnb, was allegedly to avoid lodging taxes and oversight.
“While the magnitude of this illegal scheme involving Airbnb is shocking, the fact is similar bad actors have been caught running the same ploy in other major cities across the country,” AHLA President and CEO Chip Rogers said in a statement. “Airbnb is the main culprit to blame for these illegal activities because the company refuses to prohibit this type of illegal activity and vigorously attacks city leaders who try to rein in commercial operators. Those who set up illegal and fraudulent rentals ultimately reduce the availability and affordability of housing for local permanent residents.”
Last year, Airbnb updated its One Host, One Home policy for New York in an effort to provide more transparency.
“When we implemented our voluntary One Host, One Home Policy policy back in 2016, we were clear that it was just a unilateral first step and more would be required in partnership with New York authorities,” the company said in a statement responding to the Times article. “Above all, what this report shows is the continuing need for those additional measures, in the form of regulations that will preserve the rights of local residents who responsibly share their own home while focusing enforcement resources on large-scale illegal hotel operators.”
Airbnb goes on to say it supports legislation that would improve enforcement against illegal hotel operators. Along with New York, it said it is partnering with Seattle, Chicago and San Francisco on improving enforcement.
Rogers, however, said the company’s actions contradict that claim of cooperation with governments.
“The company’s leaders claim they want to pay taxes, but only if it’s under their secret, voluntary and non-auditable tax agreement. Airbnb alleges the company is in favor of registration and compliance for their hosts, yet the company sues city governments to withhold vital information from city officials trying to protect housing,” Rogers said. “It is time for state and local leaders to pass stronger short-term rental laws and enforcement because Airbnb has shown it is incapable of preventing illegal and fraudulent activity on its platform.”