Massachusetts New Guest Tax???

[Ken-and-Kathleen0]

AirBnB collects and remits taxes in 40+ states, PR and the US Virgin Islands, but for some reason, the tax they were a proponent of in Massachusetts is not even mentioned.

There have been no updates by AirBnB on how they are going to help their hosts handle this tax which according to the State information includes all fees cleaning, and service (AirBnB Service Fee?) and the Security Deposit.

The bulk of Massachusetts AirBnB revenue in Massachusetts would have to come from Summer Rentals in places like the Cape, Martha's Vineyard, Nantucket and the Berkshires. 

Without some sort of resolution, or at least notice from AirBnB we're faced with either eating the tax, reporting costs, etc. or just cancelling all of our summer reservations. 

[Carolyn31]

The law is pretty clear that it is Airbnb's responsibility to collect and remit the taxes.  

What isn't so clear is what happens if Airbnb decides to ignore the regulation. Will hosts be on the hook? I suspect not but we probably won't know for another couple of months. My guess is either Airbnb will comply with the regulations or sue the state right before July 1st the way they sued Boston right before its regulations went into effect. I am also guessing that the state will not hold the hosts responsible for collecting and paying the taxes if Airbnb refuses but who knows. Ultimately, it behooves us to tell our post June guests that they will owe up to 17.45% or more in taxes (Cambridge is now at 17.45% and Boston could  go up to 17.95%).

I do know that the intent of the new regulations was to avoid burdening hosts, especially those who rent units on the STR market for no more than 5 months a year. 

One thing that is a bit unnerving is that the law is continuing to be tweaked so what is true today might not be true by July 1! When the law was first passed in December it was Airbnb's responsibility to register hosts. Now it is our responsibility to regisgter with DOR. What else is going to be tweaked and how do we keep up with the changes? We don't have an organization or trade union looking out of us or providing us with up to date information. 

[Gregory31]

Hi Carolyn,

My understanding is that a 5% state tax is supposed to begin June 1.  Is this mistaken?  Last year, Cambridge started an inspection process for airbnb hosts (has to be in owner's home) which includes a $100 permit fee, which I paid.  Is there anything else?

I have talked to at least 4 different customer service agents on getting the line item added for the Mass tax and to get them to take out the tax also.  They all played deaf, dumb and blind.

I did not know that they are actually supposed to do it by law or that we are supposed to register with the DOR.  Thanks for the info.  Who are we supposed to contact at DOR?

Best, Greg

[Kristen239]

I am so confused.  I called the DOR and they said that we as the owners are responsible for collecting and submitting the taxes even if we use homeaway, airbnb, etc.  Airbnb has now added the tax onto our accounts so are they going to be submitting the tax on our behalf?  DOR made told me we need to register and submit tax.

I

[Carolyn31]

Kristen,

Not sure who you talked to at DOR but, according to their point person for the new STR regulation, Airbnb will MOSTLY be held responsible for collecting and remiting the taxes.

In fact, Airbnb has been collecting the taxes since at least May 13. That is the day when I tested and first discovered they were collecting the taxes on all rentals beginning on or after July 1. 

The only taxes we will be responsible for collecting and remitting are the taxes on rentals beginning on or after July 1, 2019 that were booked after January 1, 2019 and before Airbnb had the software in place to collect the taxes for us. 

The other thing I've discovered is that both Airbnb and us hosts will both need to register with the state starting July 1.  

[Bruce25]

Thanks for the info Carolyn!   How do you test this?   Is there a way to see the total itemized bill of what your guest pays?    I seem to only find what my proceeds are.

[Carolyn31]

---

@Bruce25 wrote:

Thanks for the info Carolyn!   How do you test this?   Is there a way to see the total itemized bill of what your guest pays?    I seem to only find what my proceeds are.

---

Try to book a place in MA and you can see the tax itemized.

[John47]

@Carolyn31 @Bruce25 

You as host are NOT responsible for taxes on any Airbnb rental, THEY are.

In email from Jennifer DeSimone (MA DOR) last wk, she wrote: "The intermediary ultimately are the ones responsible for the taxes collected and reported, not the hosts. I will let our legal folks know about this and see about reaching out to Airbnb but again. This is probably going to take some time for everyone to settle in."

In response to my final point on email to her regarding incorrect tax handling, where I wrote:
"Hopefully this type of thing won't affect us because if they are supposed to charge tax and don't, us as hosts don't want to be held responsible for their mistakes!"

So not sure if that was who @Carolyn31  was getting info from.

[Carolyn31]

@John47 I know that I am not responsible for collecting taxes on my Airbnb listings.

The grey area is my former VRBO/Homeaway/Expedia listing. That platform is still not collecting ANY taxes. Jennifer has sent this information to the MA lawyers but until it is settled with Expedia, the parent company, it will remain in a grey area and the hosts can be on the line during this time. I decided to add an administrative fee to cover the taxes to the one VRBO booking impacted and block all other dates on that platform until the issue is settled. 

[John47]

@Carolyn31 

Based on Jennifer's email and the law text, I don't see any gray area. Those sites are totally responsible for any taxes due for rentals paid thru them and if they didn't collect it, it's up to them to deal with it. That's why I posed the question, though I referred to Airbnb, that it applies to ANY intermediary.

[Bernadette223]

If guests come before July 1 do we still collect the tax?  It is very unclear.  I thought if they booked before Jan. we didn't have to pay but now I'm confused.

thanks

[Carolyn31]

If a guest booked before January 1, 2019, no taxes need to be collected or remitted.

If a guest booked after January 1, 2019 and their occupancy date is on or after July 1, 2019, taxes must be collected and remitted. If Airbnb was collecting taxes for us at the time the guest booked, they will be responsible for remitting those taxes.

The grey area is if Airbnb was not collecting the taxes for us at the time the guest booked a taxable rental. I know that VRBO has refused to deal with such bookings and I've been forced to add an "Administrative Fee" to those bookings. This administrative fee will cover the taxes except that VRBO will charge me for collecting that fee! I've blocked VRBO from booking anything more until they get their act together and start collecting the taxes.

I don't know how Airbnb is planning on handling this grey area scenario. 

A great informational resource for hosts on the Cape and the Islands is: https://www.cciaor.com/shorttermrentals/

[John47]

@Carolyn31 
I've been quite active on the other thread that was mentioned here in one of the first posts and one point that I haven't seen in this thread is that, since taxes are due also on any booking fees and those are only visible to us when making a Special Offer (AFAIK), it's going to be almost impossible for us to collect the proper amt and it's thus up to Airbnb to collect/remit the tax.

Any booking fees collected by a online site are subject to tax so not sure how VRBO plans to handle that.
I've been in contact with Jennifer DeSimone at MA DOR a few times since EOY and most recently about the fact that Airbnb is seeming to make no provisons to handle the exemptions and/or the CIF which is unique to each property.

[Carolyn31]

@John47 Yep! I have blocked my listing from VRBO and will discontinue my subscription unless they start collecting and handling taxes. I sent Jennifer an email saying VRBO was still not handling taxes. I refuse to handle them myself because their software will charge me to collect those taxes! Also, it is not suppose to be my responsibility. The MA law states it is the responsibility of the entity that collects the rental fees. 

I think the one exemption that Airbnb has stated they will handle is the over 31 day exemption. At least that is what they implied in an email they sent to Boston hosts a few weeks ago. I still have not heard anything from Airbnb but I'm expecting to hear from them sometime before November 1, asking for my MA regulation certification number.

[Chaula1]

I am a superhost in the Berkshires, a collection of dozens of small quaint towns where you cannot swing a dead cat without hitting a massage therapist, a life coach, a yoga teacher or an AirBnb Host.  I have asked with regularity by telephone about whether or not there was any intention on the part of the platform to collect the tax and to this day have not received anything in my emails from the platform stating that the taxes would be collected.  I just went into my listings, clicked on LOCAL LAWS and there is now a clear statement that AirBnb WILL be collecting the 5.7% state hotel occupancy tax on our behalf.  They suggest that we all contact the town in which we are renting rooms or homes, register for permitting or licensing if required, and ask whether our town requires us to collect a local town or city tax, as I gather most of you on the cape are to collect 5.7% for the state and the other 9 or so % for the local authorities.  As of today they are saying (quietly) that we will be responsible only for the local tax collection and that, yes, we should put something in our listing that we now must collect a local tax payable by check upon arrival.  It may not be collected prior to check in.  Seems cumbersome, but think of it. If Air in in 170 countries and they had to have a separate accounting system for every little hamlet, well it might not be sustainable. 

I have resisted letting any official town office know that I am hosting until now but i do intend to register in this, my 6th year, hosting.  I am fully insured with NORFOLK & DEDHAM which is one of 2 new england insurance companies that offer a B&B rider or endorsement.  I switched over to N&D when I started and it was only slightly more than I was already paying.    They assume you are compliant with all zoning and building codes which I am, have all your safety issues covered, which I do.  If you use a commercial insurance agency and you ask for this type of insurance they are going to quote you something like 500 bucks a month to have ANY type of home business.  (I used to be a yoga teacher and had a yoga studio here and commerce insurance wanted 500 a month from me!  But N&D and one other company does offer a regular home insurance with a small B&B rider.  I am not allowed to cook for my guests nor can THEY cook in my home. A safe occupancy limit was established (2 per room).  They are not allowed in my basement to do their laundry because there is a wood shop down there.  The Rider is good for up to 3 rooms, I believe. although I only have 2.  I believe more than 3 rooms, you have to get a commercial policy.  But I could be wrong.  My insurance agent is Wheeler and Taylor in Stockbridge, MA and they can probably tell you who the OTHER company is that offer such an endorsement.

I don't think it will be such a big deal once we start doing it.  Just make sure you communicate this to all reservations prior to confirming.

[Gregory31]

@Chaula1 , many thanks for your post.  I am also a superhost, in Cambridge, for 5 years now.  I am also a very active guest away.

I actually disagree about the host having to collect the local tax.

airbnb collects gigantic fees from both guests and hosts and that is their job!  That is how they earn their fortune.

Collecting tax from every guest will be a big negative, a big pain in the ass, and will not reflect well on airbnb either.  As a guest, I would find it stupid.  If I have laid out such big fees and taxes in the first place, why should I have to write another check when I arrive?

Best, Greg

PS: maybe the insurance companies should ban eating all together.  After all, a bug might fly into a bought sandwich from the local cafe and someone catches a dread disease.

If airbnb doesn't collect the taxes, which should not happen if enough hosts