Local Occupancy Taxes in Texas

Pam2286

Hello,

I received an email tonight from AirBNB regarding some legislation in the TX House that would allow AirBNB to collect and remit "local occupancy taxes" on behalf of hosts across the state. And that it would make the process of remitting these taxes simpler for hosts.

I'm not sure what this is referring to.

I did not know we as hosts were supposed to collect and remit "local occupancy taxes".

Can someone explain what this means?

Joan2709

@Pam2286

Yes...many local jurisdictions (cities/counties) require a hotel occupancy tax be paid in Texas and Airbnb doesn't currently collect those from guests and doesn't remit those in your behalf. Airbnb doesn't always collect all required taxes and it's up to the Host to ensure all taxes are paid correctly.

Currently, Airbnb only collects the State Hotel Occupancy Tax (6%). Therefore, currently Hosts are forced to collect those local taxes directly from guests and pay those to the counties and cities directly according to the jurisdiction's payment schedule (usually monthly or quarterly). Some Hosts don't bother collecting from guests (it's a pain and you have to use the Resolution Center now), so they just pay out of pocket if the percentage is low enough and build that into their price per night.

Airbnb Tax Collection - Texas

https://www.airbnb.com/help/article/2331

State of Texas FAQs - Hotel Occupancy Taxes

https://comptroller.texas.gov/taxes/hotel/airbnb-faq.php

...Many cities and certain counties and special purpose districts impose a local hotel occupancy tax. Hosts may be responsible for local hotel occupancy taxes imposed by taxing jurisdictions where their short-term rentals are located for both Airbnb rentals and non-Airbnb rentals. If Hosts have further questions regarding local taxes, they should contact their local jurisdictions for more information...

Palo Pinto County

Looks like Palo Pinto County has a 4% Hotel Occupancy Tax that does apply to STRs (paid quarterly). Suggest you confirm that with them:

Palo Pinto County - Treasurer

https://www.co.palo-pinto.tx.us/page/County.Treasurer

If you haven't been collecting that tax from guests yourself and paying Palo Pinto County, then you still owe the tax and any penalties for not doing so.

If Airbnb says they might be able to collect and remit these taxes in the future, that's great news as it would really simplify things for Hosts in Texas. The not-so-great news is it sounds like you haven't been collecting the County taxes up to this point and will most likely owe taxes to them (and any penalties) on all your previous reservations. I would print out (or save as a PDF) all your previous reservations and determine what is owed. Then, after confirming you do need to pay this tax (until Airbnb works out an agreement with the State/County), you'll need to add this tax is required on every reservation to the listing description and notify guests that you'll need to collect that after booking and then start paying the County.

Do let us know who it goes and if Airbnb starts collecting the local county taxes.

Pam2286

Thank you for your response.

When you say "Some Hosts don't bother collecting from guests (it's a pain and you have to use the Resolution Center now)", I'm not familiar with that. What is the resolution center? Do you have your guests send you a check?

This seems like an issue that AirBNB would warn hosts about. I had no idea that occupancy taxes were required for STRs. This caught me completely unawares.

Seems like AirBNB should have a way to add that occupancy tax to a booking, and at least send that money to you (as a host) to pay.

Joan2709

@Pam2286

Airbnb doesn't make the whole tax situation clear at all when creating a listing, but they do cover themselves by putting disclaimers in their references to taxes:

Airbnb can only collect those local taxes if they have an agreement with the State or local jurisdiction to do so. You will see some cities/counties in Texas do have this agreement with Airbnb and the taxes are collected automatically (like Austin). Sometimes they do allow Hosts to add custom taxes to the listing and they will collect the tax for every reservation and then pay the Host. The Host then pays the local jurisdiction. However, Airbnb doesn't allow this in Texas currently.

Resolution Center

This is normally used when Hosts file a damage claim and request reimbursement. It is also used for guests to pay for extra services the Host provides like, payment for early check-in/late checkout, maid service/cleaning during a stay, airport transportation, etc. You would have to add info to the listing about the Palo Pinto 4% Occupancy Tax and most Hosts send a message after the guest books that it has to be collected manually. Advise they will receive a request to pay that tax via Airbnb. According to Airbnb's off-platform policy, you are not allowed to collect any payments from guest off the platform (like a check). You must use the resolution center and you must disclose all fees on the listing.

Resolution Center

https://www.airbnb.com/help/article/767

Manually Collecting Taxes

Some Hosts use Special Offers instead of the Resolution Center to collect required taxes from guest. However that is very cumbersome and can lead to math errors, since you have to add your nightly rate, cleaning fee/pet fees, etc. then properly apply the local tax (some require you to tax ALL charges including the Airbnb Service Fee and some local jurisdictions only require the tax on the nightly rate plus fees, but NOT the Airbnb Service Fee).

My advice is to update the listing advising the county has the 4% Hotel Tax and that Airbnb doesn't collect that and you are required to collect it separately. Most local jurisdictions require you to have an account number to report taxes, so I would add that local Tax Account number to your listing and send a message after booking about it and send the Resolution Center Request for the tax. Be SURE you verify with the county what should be taxed (nightly rate and fees OR nightly rate, fees AND Airbnb Service Fee).

Manual Tax Collection

https://www.airbnb.com/help/article/2496

Your listing shows Airbnb is only collecting the State of Texas tax (they will not disclose percentages, but it's 6%):

You can see this by clicking Price Breakdown on the reservation detail and then click the underlined word Taxes.

Pam2286

When I click the link you supplied for Manual Tax Collection, it says something about "Professional Toos"

"If you’re using professional hosting tools"

What is that?

Joan2709

@Pam2286

I have some clients in Texas and looks like they are allowing Custom Taxes in Texas now...previously they didn't. Not sure if that means you have to also collect the State Tax and pay it yourself or not. You would have to ask Airbnb about that. It looks like if you opt out of Default collection, you will have to add both the State 6% and County 4% and pay those separately when Airbnb pays you. Not sure that is worth it if they are contemplating collecting all taxes going forward for taxes, but that is up to you.

Professional Hosting Tools is another layer of of functionality available to all Hosts even if they only have one listing. You can read about it in the Help Center:

Professional Hosting Tools

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

Pam2286

Also, how do you find out how much AirBNB is collecting for State of Texas?

Is there some type of report?

Joan2709

@Pam2286

Taxes collected are shown on your Earnings Report. Most Hosts keep a separate Excel spreadsheet for each reservation breaking down the taxes, as Airbnb lumps all taxes in one entry.

Earnings Report

https://www.airbnb.com/help/article/416#section-heading-3

You can find answers to most questions by going to the Airbnb Help Center Articles:

Pam2286

If I click the link you supplied, it takes me to the help center on earnings.

That link says to

Click Today > Menu > Earnings
Click View earnings summary and then Get CSV report

When I click on Today / Menu / Earnings, I'm not seeing anything that says "View earnings summary".

Am I missing something?

I do see this.

Does that mean no State occupancy tax was collected?

Joan2709

@Pam2286

As I mentioned, Airbnb will lump all taxes collected (local, state) under one heading "Taxes" in the reservation detail, and in reports. They pay a lump sum for all Hosts to the taxing authorities. The Earnings Report just says "Taxes" and they will not disclose percentages anywhere on the report and who they paid them to.

To see Taxes on Earnings Reports:

Click Menu

Click Earnings

Click Settings (cog icon top right)

Choose Earnings Report

Click Create Custom Report/Make Selections

View Jurisdictions Airbnb is Collecting/Remitting For

Your can view the name of the jurisdictions Airbnb is collecting for (but not percentages) by viewing the reservation detail as I explained above, or going to the settings on the listing:

Listing Editor

Click Settings Icon (cog)

Choose Taxes

Joan2709

@Pam2286

Airbnb says they collect 6% State of Texas Occupancy Taxes:

Airbnb Tax Collection - Texas

https://www.airbnb.com/help/article/2331

Pam2286

Thank you for your help.

AirBNB certainly does not make this easy.

Joan2709

@Pam2286

No they don't for sure. 😠

Other platforms do a better job of collecting and paying local taxes and showing tax detail, including percentages, but they all pay taxes in one lump sum to the taxing authorities. Airbnb does a terrible job of explaining how important it is that Hosts research what taxes are due and how it is up to the Host to ensure they are paid. Many Hosts only find out after receiving a demand for payment of back taxes.

Here is a Guide for New Hosts that has tips on everything, but there is a section on taxes and STR regulations:

https://community.withairbnb.com/t5/Host-guides/A-Guide-For-New-Hosts/m-p/2073093#M2346

Pam2286

OK, looks like we will have to manually collect the county tax, and bill it to the guests under the Resolution Center.

In a post above, you wrote...

"My advice is to update the listing advising the county has the 4% Hotel Tax and that Airbnb doesn't collect that and you are required to collect it separately"

Where should I put that in my listing?

I've used all the available characters under "Listing Description".

Should it go under "Your Property" or "Other Details to Note"?

Joan2709

@Pam2286

Yes, I would put it under Other Details and in addl House Rules. I would mention Airbnb only collects the State Occupancy Tax of 6% but not the Palo Pinto County 4% Occupancy Tax( for all reservations under 29nights). Mention you are required to manually collect that tax from guests via the resolution center and then remit that to the county. I would also send a message to guests after booking stating the same info and advise they will receive a request to pay that tax. You can add the link to the County website that mentions the tax in the message (can't add links to the listing). I would include your Account Number for paying the taxes to Palo Pinto on the listing and in the message in case guests ask "Palo Pinto County Tax ID: 12345678"

I would find out for SURE how the county wants you to calculate the tax:

Some states it is:

just nightly rate + fees

Some states it is:

nightly rate + fees + Airbnb Svc Fee

Double check your math before sending the resolution center request. I would keep an Excel spreadsheet of every reservation for your records in case the county come back to you for an accounting of the payments you made to them. I would also either print out each reservation, or save the reservation detail as a PDF on your computer (backup on a flash drive). Here is an example of a spreadsheet template I use for the clients I work with. It includes sales tax as it was prepared for a Host who has both sales tax and occupancy taxes...looks like sales tax is not applicable in Texas.

Keep an eye on the legislation pending in the Texas legislature to see if the bill goes through. Airbnb SHOULD notify you via email if/when they start collecting the Palo Pinto tax, but I wouldn't count on it. Otherwise, Airbnb may start collecting the tax without you knowing and you will be also charging the guests, so they would be double-taxed. Hosts have reported when taxes collected are changed, they were never notified. You can also check the reservation detail to see if the 4% is being added to each reservation and also check the Tax Info section on your Listing Editor to see if Palo Pinto has been added.

Understand that there are probably many other Hosts who are NOT collecting this tax as they should, so guests might wonder why you mentioning it, but other listings aren't.