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No More Dodging Lodging Tax? AirBnB Will Now Collect It For Missouri Vacation Rentals

AirBnB moves to collect sales and lodging taxes

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AirBnB

AirBnB just became a tax collector in Missouri.

The vacation rental giant announced this week that it would be collecting and remitting seven different types of taxes for vacation home rentals throughout the state, beginning February 1, 2018. The taxes include:

-Missouri State Sales Tax

-​City Sales Tax

​-County Sales Tax

-​Additional County Sales Tax

-​Tourism Tax to Maintain Quality of Water

​-Promotional Tourism Tax

​-Local Sales Tax

AirBnB pointed out those taxes would be listed as a separate line item on bookings, and the cost would be passed along to guests, rather than docked from homeowners’ payouts.

The company has cozied up to government entities in recent years. At the 2016 annual meeting of the US Conference of Mayors, AirBnB’s Head of Global Policy and Communications Chris Lehane put it plainly, in a twist on a phrase that backfired for former president George H. W. Bush, “Read my lips: we want to pay taxes.”

AirBnB says it is providing this service free-of-charge to governments.

The company figures their tax collecting move could bring up to $1.1 million in revenue to the state of Missouri, and that’s only accounting for the state sales tax. It will likely have a large impact at Lake of the Ozarks, where AirBnB rentals brought upwards of $1.57 million in income to hosts, with at least 13,660 guest arrivals logged. The Lake is one of the most popular destinations to visit in the Midwest, with Osage Beach and Lake Ozark among the top eight home sharing markets in Missouri on AirBnB.

At the Lake, the Tri-County Lodging Association (TCLA) levies a 3 percent Lodging Tax (Promotional Tourism Tax) on hotel stays and vacation home rentals. The association was formed in 1993 and a tax of up to 6 percent was approved by a public vote. It now raises more than $1.5 million annually in lodging tax, for the purpose of promoting tourism at Lake of the Ozarks: that means billboards, radio spots, print publications, and the maintenance of FunLake.com.

TCLA Administrator Jim Divincen says the association has contacted its attorneys to communicate with AirBnB for the purpose of working out a lodging tax collection agreement for the Lake of the Ozarks.

The TCLA has historically had a difficult time convincing all homeowners who rent their home on a short-term basis that they ought to pay the lodging tax. It is unknown how many homeowners are not paying the tax that the TCLA says they owe, but when the association finds out about a homeowner who is renting but not paying, they send a “Welcome” letter to the homeowner informing them of their tax obligation and the benefits of being a member of TCLA.

The TCLA does seek out those who are avoiding the tax, but the association’s authority is limited in how it can pursue those individuals. TCLA can ultimately file a lien against them, but that takes nearly half a year to accomplish, and at that point the process has only just begun. Divincen said the association has met with the Missouri Department of Revenue, but the DOR expressed no interest in helping enforce the collection of these lodging taxes. 

While language in the infamous Missouri “Expedia Bill” of 2017 would have mandated the collection of applicable taxes by vacation rental transaction platforms (such as VRBO.com and AirBnB.com), State Representative Rocky Miller says that was not the main thrust of that bill. He mainly saw the bill as something that was meant to stop cities from suing to prevent homeowners from renting (a perspective, he acknowledges, that was not shared by some local homeowners). He said he’s not heard anything this year about a 2018 version of the “Expedia bill,” but said it’d probably be better if there were no legislative action at all on that front. Representative Sonya Anderson, who filed the bill last year, has not filed an equivalent of it at this point in the legislative session.

AirBnB representative Benjamin Breit said the company does not have any plans to work with Missouri legislators on a vacation rental law in 2018. But on the company's "Tax Facts" page, it notes, “we have worked with governments all over the world to craft progressive new laws or, where appropriate, support existing ones.”

The TCLA and other local taxing entities will have to work out an agreement with AirBnB, however, if they want those taxes to be collected and remitted by the website. “Airbnb welcomes the opportunity to secure tax agreements with any additional Missouri municipalities who assess their taxes independently,” the company said in the announcement. “Local governments should contact the company at taxagreements@airbnb.com to discuss further.” The company noted hosts are responsible for understanding and fulfilling all of their tax obligations.

It also added, “If you believe applicable laws exempt you from collecting a tax that Airbnb collects and remits on your behalf, you have agreed that, by accepting a reservation request, you are waiving that exemption. If you don’t want to waive an exemption you believe exists, you should not accept the reservation.”

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From the FAQ section of AirBnB’s announcement for hosts:

Will my payouts be affected? 

No. The tax(es) will be charged to guests.

How can I see the amount of tax collected on my behalf? 

The amount is displayed in the Gross Earnings tab of your Transaction History. 

Will you share my personal information when remitting tax? 

No. We will be filing one tax return per jurisdiction with the total combined reservation revenue for all Airbnb bookings in the area. This means that all hosts will be represented by one payment amount, and we will not be providing your personal information on the return.

I’ve been collecting the above tax(es). What do I do now? 

You’ll no longer need to collect this tax from guests who book their reservation on or after February 01, 2018.

Are there other taxes that I need to collect? 

You are responsible for understanding and fulfilling all of your tax obligations. For a summary of the taxes collected by Airbnb for a listing, visit the Manage Listing page and click Local Laws. The process for collecting other applicable taxes from your guests is outlined here. As always, you must be upfront about any such taxes with guests before booking.