Why is the Airbnb service fee being taxed in Virginia?

[Stephen121]

Our State tax rate is 5.3% and our local tax rate is 8%. Airbnb is collecting both taxes on their own service fee. 1. It says on Airbnb's page here: https://www.airbnb.com/help/article/2523/ that guest service fees are NOT taxable.  2. Is everyone in Virginia experiencing the same issue?  3. Is this legal? Taxing the cleaning fee is questionable as labor is exempt from sales tax in Virginia. I can't imagine taxing a fee is legal.  This is causing unnecessarily high fees for our guests and needs to be changed. 

[Mike-And-Jane0]

@Stephen121 The taxes possibly charged on your listing are as follows:

Taxes on accommodation such as Occupancy Tax, VAT or GST. May also include tourism fees. Transient Occupancy Tax (Roanoke) Local Sales and Use Tax (Roanoke) Retail Sales and Use Tax (Virginia)

I would have though all of these should apply to the cleaning fee as otherwise hosts would charge a low nightly rate and a high cleaning fee to avoid tax.

Same goes for the fees - If it was a normal business a host would pay for advertising and then charge this in their nightly rate so it would be taxed. Airbnb is only really an advertising agency.

[Stephen121]

Thank you for the help, but it doesn't explain why on airbnb's own site it clearly says guest service fees aren't taxed. 

[Mike-And-Jane0]

@Stephen121 I didn't read it carefully but I think Airbnb's site says it is charged when they are collecting the fee and not charged when you are collecting the fee. Have another look and see if I have got this right.

[Stephen121]

I believe you are right. That's unfortunate because it is unnecessary and not required in our state. Services and labor are tax exempt. 

[Shannon955]

The Airbnb help article says:

Guests who book Airbnb listings that are located in the State of Virginia will pay the following taxes as part of their reservation:

• Sales Tax: 5.30 - 7.00% of the listing price including any cleaning and guest fees for reservations 89 nights and shorter. For detailed information, please visit the Virginia Sales Tax website.
• Local Lodging Taxes: All locally imposed transient lodging taxes will be collected on reservations in Virginia. It is typically a percentage of the listing price including any cleaning fees and guest fees. The tax rates and exemptions vary by city and county. For detailed information, please visit your local finance department website.