A PREVIOUS U.S. Supreme Court ruling invalidates the “voluntary collection agreements” for sales tax several states have with online stay-sharing giant Airbnb, according to a report released on behalf of the American Hotel and Lodging Association. The report comes a month and a half after AAHOA filed a petition with the Florida government saying Airbnb’s VCA with that state is improper.
“Report: Airbnb’s tax agreements are obsolete,” by former director of the Montana Revenue Department and previous executive director of the Multistate Tax Commission Dan Bucks centers around last year’s Wayfair vs. South Dakota decision that ruled the state was allowed to tax the online furniture outlet even though it had no property or employees in the state. Bucks said that eliminates the need for VCAs, which he also said provide Airbnb with an unfair advantage over hotels.
“Airbnb no longer qualifies—if it ever did—for privileged treatment by tax agencies as a ‘voluntary collector,’” states Bucks in the report. “This treatment gives Airbnb an unfair advantage in the marketplace by creating a tax and regulatory haven for Airbnb lodging operators.”
Bucks called on state and local government leaders to terminate similar agreements as they adopt “general marketplace provider” legislation. AHLA says replacing the agreements would provide a level playing field as Airbnb continues to enter the lodging space with hotels.
“Airbnb has been making back-room deals and strong-arming state and local jurisdictions into ‘voluntary’ tax deals with no transparency, oversight or auditing capability for years,” said AHLA President and CEO Chip Rogers. “Airbnb, and other short term rental platforms need to abide by the same rules as all other law-abiding, tax-paying businesses in the industry.”
Rogers also cited the case of San Francisco, home of Airbnb’s corporate headquarters, where the company agreed to pay back taxes and collect city taxes from its hosts, as an example to follow.
In February, AAHOA filed a petition with Florida’s Division of Administrative Hearings saying Airbnb’s VCA there violates proper approval process and public disclosure rules defined by state law.
“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.”