How to remove tax collection from listing or get a refund

[Betty476]

I'm in a city within LA county that allows short term rentals in a very narrow and specific circumstance and requieres a business license. So I am using airbnb as a mid term listing platform but they are collecting city transient tax on the bookings. What they will do is if the booking is for more than 30 days, they will break it into two bookings and split payments. So the first 30 days is due before the stay start and then the remainder, be it 1 or 5 more days, they will have it due two weeks into the stay. Since it isn't a short term rental and I don't allow bookings for less than 31 days, am I supposed to go to the city to ask a tax refund? It seems airbnb should not collect nor can their agents explain why it is being done this way. 

[Joan2709]

@Betty476 

Doubtful any refund will be offered as you didn't receive the TOT - The City of Torrance did.

Turn ON "Long Term Stays Allowed"

First, turn on Long Term Stays Allowed in the amenities section of the Listing Editor. Click the (+) sign top right:

Then see if that makes any difference on the taxes when you try to book as a guest incognito mode.

Contact Airbnb

If that doesn't change anything, then contact Airbnb and provide them with screen shots showing taxes are being collected, even though the stay is 31days+ and no taxes are due to the City of Torrance. Provide the City's website URL and a screen shot of the exemption for over 30day rentals:

City of Torrance

https://www.torranceca.gov/government/city-departments/finance/fees-fines-and-taxes/taxes

Turn OFF Default Tax Collection - Preferences

I would verify by calling the city that indeed anything 31+ days does not need to pay the TOT. If they verify, you could just turn off Airbnb Default Tax Collection on your listing. You need to turn on Professional Hosting Tools and then go to the Listing Editor/click the cog icon top right/Taxes:

Professional Hosting Tools

https://www.airbnb.com/help/article/2499

Missing Amenities?

BTW, Airbnb says you don't offer "Essentials" (TP, soap, towels, linens) or Hot Water? You might want to add those to your amenities list:

[Betty476]

Hi,

Appreciate the response. I did call Airbnb customer service when I was with a guest who didn't understand the charges. That's how I discovered that taxes were being charged. I have updated the amenities per your suggestion (plus the others).

When I went back to look up the rates, what I've found is Airbnb is purposely applying the taxes by breaking up the booking by splitting the first 31 days as one payment and the subsequent days (in this case 4 days) into a second payment at the end of their first 30 days. 

When I asked the Airbnb agent, he didn't understand why Airbnb was doing this nor could provide any assistance. I cannot turn off tax collection, it is "automatically" applied.

I was hoping someone has come across this issue but it sounds like I have to approach the city to get a refund on the taxes collected.

[Joan2709]

@Betty476 

As I mentioned, you will not get a refund. Airbnb has already paid those taxes to the City of Torrance - you don't get a refund for taxes paid to the tax authority. The guest could approach Airbnb and ask for a refund, but you can't.

Monthly stays are always paid in increments. The first 28+ days is due at booking. The next payment is not due until the next month. Airbnb advices the guest 10days prior as to when the next payment is due. There is nothing out of the ordinary there:

Monthy Stays - Payments

https://www.airbnb.com/help/article/245

If you are still see taxes applied when they shouldn't be, I would turn off default tax collection as I mentioned above. Past guests who were charged the TOT could contact Airbnb and ask for a refund - they paid the tax, not you as Host. 

[Betty476]

Hi,

I understand but I doubt the guest will pursue the refund on taxes, they are more likely to just choose another property in their price range. I'm more annoyed that I am at a disadvantage. On VRBO, I can turn off the tax collection but I have read the article about tax collection on Airbnb and also the Airbnb agent on the phone cannot remove the automatic tax collection. The agent says it is hard coded with no exemptions. I'm fairly certain Airbnb doesn't care enough for my local area to amend their scripting. It is probably easier for them to lump all owners in the same bucket. Surprisingly, they haven't gotten in trouble with having unregistered properties operating in the city. It's why I don't allow less than 31 days because you need to get a business license to operate as a short term rental.

[Joan2709]

@Betty476 

Did you check the Taxes Section on Airbnb as I mentioned in preferences? If there is not a place to add a Custom Tax, then you will have to pursue getting Airbnb to correct the error as I mentioned. Prepare for an uphill battle on that one. Advise Airbnb it has to be escalated to the Tax Area ID department to address it.

The only other thing you can do is advise guests that Airbnb is collecting the TOT in error and they should contact Airbnb to get a refund. Maybe if they get enough guest complaints they will fix the problem?

You could consider blocking your Airbnb calendar until resolved and push more bookings to Vrbo. However, if other Hosts doing 31+ night stays in Torrance are having the same problem, there is no reason to block your calendar as everyone will have the same issue on Total Price with taxes included.

[Betty476]

Yea, I figured it would be an uphill climb. In the end, it is the guest that is being punished for it.

Yes, I can add a custom tax but it would be in addition to the collected one. On the top of the page, the paragraph says "the following taxes are being collected automatically." There is a box in the area that says "Torrance TOT tax" and it is fixed. Can't click on it or anything. 

Below that, it says Custom Taxes and you can manipulate that section. 

[Wendy-May0]

That is quite frustrating and messy, but you're spot on, it's a known nightmare when you're doing mid-term on Airbnb.

You're totally correct, stays over 30 days are generally exempt from Transient Occupancy Tax (TOT) in LA County because they count as residential tenancies. Airbnb’s system is collecting it because their payment processing logic is flagging the split payments as two short stays, or a hidden setting on your listing is telling the system it’s subject to tax. The agents won’t be able to fix this, it’s a technical compliance issue they can’t touch.

Here's the two-step fix hosts have used to force a correction:

1. Check the Tax Exemption Flag. Go into the local tax or regulatory section in your listing settings. Even with a 31-day minimum, there's often a box you manually need to check to declare the listing as tax-exempt due to the long minimum stay. That’s the first thing to check to stop future collections.

2. Force the Refund. Since Airbnb collected the TOT, they are responsible for refunding it. If regular support stays silent, many hosts find they need to send a formal Notice of Dispute to Airbnb's legal address. It sounds dramatic, but it’s often the only way to get the compliance department to actually open the case and process the refund.

Definitely start with fixing that tax exemption setting first.

Are you using a Property Management System (PMS) at all, or setting those 31-day minimums directly in the Airbnb calendar rules?

[Joan2709]

@Wendy-May0 

@Betty476 mentioned she doesn't have a business license? The tax exemption box appears when adding a custom tax, but you might have an idea there! The only issue would be if there is sales tax, or state occupancy tax also collected by Airbnb. Sales tax would still apply to long term stays. If no sales tax or state occupancy tax, I think you have a good idea 

Seems like @Betty476 mentioned she couldn't add a Custom Tax when she checked.

@Wendy-May0 You are on to something though. I think if @Betty476 ONLY does long term renting, she should be able to select "I'll collect the taxes myself - Custom Option. Not try to add a custom tax. The only issue would be if she ever did short term by accident. or proving she actually only does long term to the City, therefor no taxes are due.

@Betty476  - as long as you would not owe sales taxes local or state, and there is not a state occupancy tax, then you can you try and choose the "Custom - I will collect and remit my own taxes? As long as you are sure you will NEVER do short term renting this might work.

Just select "Custom" and don't choose "add a tax" and see what happens? Let us know if that works for you?

Airbnb should still be apply the automatic exemption even if you haven't added a Custom Tax, or you are in the Default option. One listing I work with has taxes removed for any stays 30+days or more. That listing also does short term and the taxes are applied as they should be. This appears to be something that needs escalated to Airbnb engineering, as it would affect all listings in Torrance that Host long term stays as well as Hosting short term and long term both.

[Betty476]

I have not had a booking because the guest didn't like the total price. I told her to go to VRBO.

I'm an individual owner with two properties.  I manage directly the pricing and settings.

I've already gone through with the CR on phone and they also cannot undue the tax. There is no setting.

They acknowledged that it shouldn't but that Airbnb has decided to apply the tax automatic ally

[Joan2709]

@Betty476 

I edited my post after you responded...

you should still be able to chose "Collect and remit my own taxes"...

that might solve the issue, but if there are sales taxes (state/local) or a state occupancy tax, that wouldn't work.

Can you try that and see if that works? I tried this on another listing and it appears it does work?

[Betty476]

I can't screenshot the tax section but I selected the text and pasted below.

Local tax collection

Taxes/fees may apply to your bookings. Airbnb collects tax(es) on your behalf and you have the option to set, collect and remit additional tax(es) yourself.

Local taxes collected and remitted by Airbnb

We automatically collect these taxes from guests for each booking and remit them directly to local tax authorities. Learn more

Transient Occupancy Tax (Torrance)

Review the tax amounts collected by Airbnb

Custom tax collection

If additional taxes are applicable to your bookings, you have the option to add them in the Custom Tax Collection tool. Taxes collected will be sent to you to remit to the tax authorities. Learn more

Add a tax

[Joan2709]

@Betty476 

Well...rats! 

Ok, then this is definitely an issue with Airbnb then. This needs to be forwarded to Airbnb's Tax Section and they need to add the exemption for your TAID (Tax Area ID) for Torrance so guests are not getting charged taxes for long term stays 31+ days.

This is from Oregon and sounds like this is similar to what you are seeing. This usually means Airbnb has a formal agreement with the City of Torrance to collect the tax on short term stays. Airbnb needs to update the tax to indicate the exemption for long term stays in order for those reservations to appear correctly with no tax:

@Rebecca @Bhumika would you be able to forward this to the correct Team at Airbnb?