South Carolina taxes - all covered, or just state?

[David259]

On May 18, I received an email saying that Airbnb will begin collecting and remitting taxes in South Carolina starting June 1, 2016. I was very excited! I currently pay a fee to MyLodgeTax (Avalara) to handle tax reporting/payment to all the various state and local entities, and would love for Airbnb to handle that (for free). HOWEVER, when I emailed MyLodgeTax to cancel their service, they told me that "Airbnb is actually only paying the taxes collected by the state of South Carolina, but there's a separate accommodations tax collected by/paid to Charleston County."

Is it true that Airbnb isn't handling ALL taxes? That would be really, really frustrating!!

As part of my contract with MyLodgeTax, they handle the following taxes, which add up to 13.5% total:

South Carolina Sales Tax  5.0%

South Carolina Accommodations Tax  2.0%

Charleston County Accommodations Tax  2.0%

Charleston County Local Option Tax  1.0%

Charleston County Education Tax  1.0%

Charleston County Transportation Tax  0.5%

North Charleston Accommodations Tax 2.0%

I would STRONGLY prefer for Airbnb to handle all these taxes; a "halfway" approach (only doing state-level taxes but not local) will just complicate things, and force me to keep using MyLodgeTax, or else do a lot more manual tax paperwork. Ugh. It would also mean that realistically, a lot of folks simply won't pay the local taxes that they owe. Double ugh. Please help out us SC hosts who want to do the right thing, Airbnb!

[Martia38]

All, you do not have to file in MYDORWAY; ABB does pay State taxes but does NOT pay Charleston Co and in my case: Folly Beach. That's an additional 4%; furthermore, I am charging my guests 5% extra (bc we have to pay an additional "tax" per $1000 on Folly Beach. ABB is taking a portion of my 5% I have allotted for "Lodging Tax" -- No one from ABB will return my call on this and keeps "closing the case" I'm really frustrated. 

[Mary25]

If Airbnb people are paying all these taxes what is everyone - Hotel people - complaining about?

[Gregg7]

We know the total hospitality tax on the Isle of Palms is 13.5%. Rather than sounding like deliberately vague lawyers, politicians or accountants...could someone at Airbnb just tell us  what % you're paying so we can subtract that from 13.5% and pay the difference? For instance, if you tell us you're you're paying 7%, we will know we need to pay 6.5%. If you  tell us you're paying 9%, we will know we need to pay 4.5%. All I want is a number. I had hoped I could just look at the what each guest paid us and what they paid in taxes and do the calculation for myself...but you don't share that info, so I am at your mercy. Thank you, Gregg

[David259]

Hey Gregg,

I'm not on staff with Airbnb, but I can pass along what Avalara / MyLodgeTax told me (they seemed to be very knowledgeable about all the details). The short answer is Airbnb pays 9.5%. Below is a condensed version of an email chain I had with them to explain where that number comes from.

Hope this helps!

-David

 ________________________

The way the tax rates are listed is a bit confusing.  The two rates with a single asterisk below (*) are the percentages that are paid directly to Charleston County.  The rest of the percentages are paid (by Airbnb) to South Carolina, who then redistributes any necessary amounts to the county.  So you are only responsible for remitting the 4% due to Charleston County.

South Carolina Sales Tax - 5.0% - Airbnb pays this

South Carolina Accommodations Tax - 2.0% - Airbnb pays this

(*)Charleston County Accommodations Tax - 2.0% - You pay this

Charleston County Local Option Tax - 1.0% - Airbnb pays this

Charleston County Education Tax - 1.0% - Airbnb pays this

Charleston County Transportation Tax - 0.5% - Airbnb pays this

(*)North Charleston Accommodations Tax - 2.0% - You pay this

TOTAL - 13.5%

(9.5% paid by Airbnb, 4.0% paid by you)

[Gregg7]

Thank you for this! We have been renting our house on VRBO for years and have added 13.5% tax to every rental and then remitted the tax monthly. This half-in, half-out set up with Airbnb makes things rather complicated, doesn't it? It seems to me it would be better for Airbnb to collect the full 13.5% as tax, send 9.5% to the state and give the other 4% to the host to remit. Or just add the 13.5% and give it to the host to remit all 13.5% just as one would with a VRBO rental. Or give us the hosts a few options. The current set up is messy and confusing and puts the host in a bad light. FWIW Gregg

[David259]

Yes, I totally agree that it's messy. I mentioned this to Airbnb right after the initial announcement ("I'd strongly prefer to for Airbnb to collect and remit ALL taxes on my behalf!"), and their response was basically, "We'd love to, but it's complicated legally - our hands are tied." I don't really buy that response... all they'd have to do is get hosts to sign a power of attorney to let them file taxes on their behalf (this is what Avalara / MyLodgeTax does; it's an easy process to do electronically). I'm sure the municipalities would be more than happy to help facilitate the process.

I think the real reason Airbnb doesn't collect any more taxes than they *absolutely have to* is to keep the rental prices as low as possible - they're probably afraid that if they charge the full taxes, Airbnb's prices won't be as competitive as before and they'll lose some market share. I suspect that many hosts don't bother to pay taxes, and so it would be a big change to start collecting them suddenly. It's sad to me to think of all the revenue that local municipalities are losing because people aren't paying taxes. That money could be well spent on infrastructure upgrades and maintenance that is sorely needed!

Anyway, hopefully Airbnb will get with the program and eventually start collecting ALL taxes (the sooner the better, in my mind).

[Gregg7]

Thanks, David!

Airbnb, are you listening?

Under the current scenario, after YOU charge guests taxes WE have to explain to guests why WE are charging taxes, too. Gee, do you think potential guests might think we are up to something fishy when we do that?

Or we can just raise our rates 4% or just eat the 4% and pay the taxes out of our pockets. Is that really how you want to treat us your hosts, who are your business partners, and how you want to treat your guests who are your clients? 

Gregg

[Anna464]

Great thread - super helpful.

Airbnb should enable us to add on the 4% to the pricing (and allow explanation field so we can let guest know which addtl taxes are covered).  Right now there is no way under price setting > extra charges and currency to add that percentage on.

Airbnb can you add that feature please in the meantime?

[Helene114]

@David259 Im just weighing in on this but just to clarify; according to Eddie at Aribnb, they only pay %5, %2 and %.5. However the folks at MyLodgeTax said they're paying %9.5 for you. Which is correct?

Ive been hosting for just over 3 months now and I've kept all of my earnings in a separate account, approx $6.5K to date. Am I supposed to have a separate business license and file quarterly (which means Junes earnings would be filed by the end of July)? 

I was really loving hosting but if I have to navigate MyDorway for 30 mins (whenever they change thier site or location) to pay a few dollars...I'm gonna be grumpy. Then I will have to go shopping and buy some Bath & Body Works, a new comforter, softer towels, new wall art and maybe even a fancier coffee or latte maker for my Airbnb.... that will put me in the proper hosting mood 🙂

Helene

[Pat271]

So funny, @Helene114  - that last paragraph is me to a tee! 😂

[Eric256]

Airbnb hope you can clarify!?

Background:
Currently the tax rate in Isle of Palms (Charleston County) SC is shown below:

State of SC 5% State Sales Tax
State of SC 1% Local Options Tax
State of SC .5% Charleston County Transportation Tax
State of SC 1% Charleston County School Tax
State of SC 2% State Accommodations Tax
Charleston County 2% County of Charleston Accommodations Tax
Charleston County 1% City of Isle of Palms Accommodations Tax
Charleston County 1% City of Isle of Palms Beach Preservation Fee


As owners we are registered with the State, County, and Local Municipality to collect and remit taxes.

The local municipality collectes through the county and through a business license paid once a year. The state collects via a sales tax return online. The County collects via a voucher booklet that you normally have to email them and get a copy of.

That being said. Prior to Airbnb paying taxes in 2016 I filed my taxes for the Sate and reported and remitted gross sales for Airbnb and other sales.

Question!?
Now that Airbnb has taken over do we still report the Airbnb sales to the state?

I understand that we will still remit our 2% County + 2% Local = 4% to Charleston County, and that Airbnb will remit the remaining 9.5% to the state. But do we report the sales? Or is Airbnb reporting and remitting on our behalf?

Current Understanding:
I assume that we continue reporting either zero returns to the State if we have only Airbnb income, and simply report sales not that are not associated with Airbnb if they come up.

Thanks,

Eric

[David259]

Helpful update from Avalara / MyLodgeTax received on March 21, 2017:

Charleston County, SC Sales Tax rate will increase by 0.5% as of 5/1/2017.  Therefore, the total tax rate you should charge your renters after 4/30/2017 is 14%.  This new rate is comprised of the following:

South Carolina Sales Tax                                   5.0%

South Carolina Accommodations Tax                 2.0%

Charleston County Accommodations Tax           2.0%

Charleston County Local Option Tax                   1.0%

Charleston County Education Tax                       1.0%

Charleston County Transportation Tax                1.0%

North Charleston Accommodations Tax              2.0%

TOTAL                                                              14.0%

Revenue that you report to us in May 2017 for your April revenue will be taxed at the old rate of 13.5%.  Revenue that you report to us for rentals after 4/30/2017 will be taxed at the new rate of 14%.

If you already have contracts in place for rentals after 4/30/2017, you have three options:

1. If you’ve already collected the tax, then report all of the revenue on your April return (when you report to us in May) and pay the old rate.  (Technically, you are required to remit the tax in the period in which you collect it.)
2. Contact your renters and charge the additional 0.50% (= $0.50 on every $100 of rent).  If they were staying at a hotel they would pay the stated tax on the day of their stay.  We encourage our clients to state the rental rate and the taxes separately on their invoices, so that it is easier to collect any increase in taxes from their renters.
3. Pay the additional 0.50% out of your own pocket

[Kevin891]

Eric, My property is on Isle of Palms as well. I assume you eventually found out how to file your SC taxes. That's where I am confused trying to fill out the MyDORWAY online forms. Do we show a zero income return?

Thank you for any help you can provide. So frustrating trying to find iformation.

Kevin

[Sidney15]

This is a very useful thread, thanks to all who contributed.

My unit is in North Myrtle Beach, which from my best research has the following tax:

South Carolina sales tax: 5%

South Carolina occupency tax: 2%

Horry County transient tax: 1.5%

City of North Myrtle Beach tax: 1.5%

Total of 10%

I noticed from gross receipts mentioned above, the sales after April had 10% total tax collected by Airbnb, which matches the total tax required, but based on the statement that Airbnb only collects tax that the state handles, I wonder exactly where the 10% goes.

Even more interesting, the sales in April (my first month with Airbnb as host), only 9% is collected.  Where did those tax go?

From the other replies in this thread, it seems like Airbnb should only collect 7% for the state if the county/city tax are not collected through the state, which it seems like Horry County and North Myrtle Beach collect their own tax, not through the state.

Does anyone know exactly how this works, or have experience with Horry County or North Myrtle Beach?

Thanks!!

[Wanda30]

For SC hosts, the SC Dept of Revenue, ST-575 details the tax % due to the state based on municipality.   Easy to access using Google.  The percentage shown is the amount collected by the state.  For example, our condo in Surfside Beach has a state rate of 9% :

 7% state sales and accomodations taxes + 1% Capitol Projects + 1% Education Capitol Improvement.  I also pay 1.5% to Horry County and Town of Surfside Beach each.  Total 12%.  

I just recently had my first AIRBNB guests and I don't understand how the taxes are calculated.  It's close to 10% so not sure if they are collecting the 9% for SC and the other 1% to???.  Customer support is no help as of yet.