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 

1. Click Today > Menu > Earnings
2. 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