Massachusetts TAX EXEMPTION???

[Susan241]

AIRBNB Customer Service is useless. 

Their explanation of taxes is more useless 

can anyone give a short, and accurate answer to my question. 

I rent a room, max 2 people, July and August. I live in the house and serve breakfast.  

Will AIRBNB take taxes from my rate?

if they do and I’m exempt from taxes ...how do I tell them not to?

Thank you!

[Susan241]

Yes the 20,000/200 has to do with fed taxes.  And when you exceed that number is when you need to become a business. So I’m told.   The person that told me about the 3 or less bedroomin the house made it sound that it had to be a smaller dwelling as she referenced it to her huge AIRBNB rental and mentioned that I would fall under the guidelines but she may not. You might be right but regardless the people that are exempt look like they are not as taxes are being collected and not even AIRBNB knows altho collecting.   

[Molly168]

I've never seen/read the 20K/200 rentals before either Susan.  Send a link to the regs if you come upon it again - thanks!

[Fred-and-Shara0]

I have the same issue. Renting my primary home less than 14 days in Massachusetts, meaning I have a tax exempt status, and having AIrbnb charging my guests the occupancy tax. I contacted DOR and they simply told me that Airbnb is not suppose to collect the tax on my behalf. I think I should be able to get that money back in my tax return but meanwhile I'm looking for clear answers. Here is a link that explains the responsibilities of the Operator and the Intermediary:

cciaor.com/news/dor-issues-expanded-guidance-on-intermediary-responsibilities-on-short-term-rentals

Note: 

- You must file a notice with the Department of Regulation saying they will only rent 14 days or less

-> Where do you send this notice at DOR?

-  Also interesting:

• If an Operator claims their property rental is exempt from taxes and fees – generally because they are renting the property for not more than 14 days annually, it is a timeshare, or they satisfy the exemption requirements for some B&Bs – the Intermediary will not charge taxes, fees or excise. However, if the property that was claimed to be exempt because it would not be rented for more than 14 days is rented through the Intermediary for more than 14 days, it’s the Intermediary’s responsibility to begin collecting taxes, fees and excise on the 15th day and beyond. The Operator is responsible for paying the tax for the previous 14 days. Similarly, if an Operator claiming to be an exempt B&B home does not meet the requirements for that exemption, it would be the responsibility of the Operator to pay the appropriate taxes, whether or not they were collected from the occupant.

I will post some answer as soon as I get some.

[Fred-and-Shara0]

Latest message from DOR Massachusetts:

AirBnB should not be collecting taxes on these rentals and, as an intermediary acting on your behalf, is responsible for reimbursing the renter for erroneously collected tax.  You will not be able to amend your return as a result of their error.

From the regulations - "12. transfers of occupancy of a room or rooms in a short-term rental  of not more than 14 days in a calendar year, provided that the operator has first: (i) registered with the Commissioner; and (ii) filed a declaration with the Commissioner setting forth the intention to transfer the short-term rental for not more than 14 days in a calendar year, in accordance with the procedures set forth in 830 CMR 64G.1.1(11)."

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It looks to me like lawyers will need to get involved for renters with exempt status to either have the tax collected reimbursed or allow the host to opt-out automatic tax collection.

[Fred-and-Shara0]

From Airbnb:

Here's what I have:

Airbnb has entered into a voluntary collection agreement with the local tax collector in Massachusetts, so the tax is assessed automatically by Airbnb. When Airbnb remits taxes, we file one tax return per jurisdiction, with the total combined reservation revenue. This means that all hosts located in your area will be represented by one remitted amount, and we will not be providing your personal information on the return.

Hosts with listings in these areas should also review their agreement with Airbnb under the Terms of Service and familiarize themselves with the Occupancy Tax provisions which allow us to collect and remit taxes on their behalf and explains how the process works.

Under those provisions, hosts instruct and authorize Airbnb to collect and remit Occupancy Taxes on their behalf in jurisdictions where Airbnb decides to facilitate such collection. If a host believes applicable laws exempt the host from collecting a tax that Airbnb collects and remits on the host's behalf, the host has agreed that, by accepting the reservation, the host is waiving that exemption. If a host does not want to waive an exemption the host believes exists, the host should not accept the reservation.

For specific information, we encourage you to contact your local tax office directly, as they will have the most accurate and up-to-date information. Your local tax collection official and/or a local attorney may also be able to provide additional information or advice about your personal situation.

Best Regards,

Cassandra

[John47]

@Fred-and-Shara0 
Kind of looks like it may be necessary to get DOR lawyers to convince Airbnb to properly follow the laws regarding exemptions! Because telling the host to 'not accept the reservation' is the only way to avoid having guest pay taxes they aren't required to implies that Airbnb doesn't want any 'B&B homes' on their site. And that type of listing is what Airbnb was originally targeted towards (IMO): The owner occupied, 1-3 rooms with breakfast ones.
And it's almost impossible for a host to properly compute the tax due on a Airbnb rental (unless a Special Offer was used) because the Booking Fee isn't disclosed to us normally and that's also subject to the tax.
Suppose a host rented for 13 days in early Jan and then rents for 2 days in late Dec, thus violating the 14 day limit. Just how does DOR think a host or even an intermediary can collect tax from the Jan guest almost a year later? That's another issue I see.

[John47]

Highly suggest everyone (who hasn't yet) read this page which tells intermediary like Airbnb what they must do and not do as related to us as operators:
https://cciaor.com/news/dor-issues-expanded-guidance-on-intermediary-responsibilities-on-short-term-...

[Jonathan70]

I rent a Travel Trailer.  It is not a residential property, apartment, cottage etc. and is not included in the MA definition of short term rental.  How do I get ABB to not charge the tax ??

[John47]

@Jonathan70 
Ah, but it does appear to be a "short-term rental" actually. Because the definition says: "including, but not limited to, an apartment, house, cottage, condo or a furnished accommodation" and a trailer meets that criteria that I've underlined as I see it, unless the trailer is unfurnished.
I'm not an expert but have read the law a few times trying to find exceptions to it or things that are unclear.

Addendum/Update: The issue that I see is that you're in Plymouth which has voted in the 3% CIF which shouldn't apply to you, I believe, and there's currently NO way that I know of to indicate that to Airbnb, and is an issue that I've reported for others here to Jen @DOR.

[Chase68]

Hi John.  Has anyone figured out if/how to register with MassTaxConnect if you are an exempt B&B Home?  We certainly qualify, though when I registered there was no option with the website to select B&B Home, only an option for regular B&B.  Seems like you navigated this vortex for a while now, so maybe you have some insight?

[John47]

@Chase68 
I am suspicious that your listing does NOT qualify as a 'B&B home' due to its characteristics.
I did take a look at it to better answer your post and what makes it appear (to me) to not meet requirements is that it's not just 1-3 rooms within owner occupied property where breakfast is served.  It's that last part that can really make the difference. Doe your guests come into your space to be served breakfast? Because if they don't, it's not what would be a B&B type operation.
I believe that it also needs to have a common entrance through your portion of the building so a separate entrance is another issue.

I'm not an expert at this but because I was disappointed that that exemption remained when lawmakers  said they wanted to tax all short term rentals. 

Addendum/Update: A B&B Home is what might be a 4 bedroom house where 1-3 of the bedrooms are rented and guests are served breakfast in the common kitchen/dining room.  Your listing looks nothing like that, IMO.

In my listings, my Apartment unit is a similar setup and it doesn't qualify as B&B Home.

[Chase68]

They have breakfast in their space but enter through a common entrance.  Do you know where it states that breakfast must be served in a common area?  So far I have not found anywhere that MA states anything regarding breakfast other than it's "breakfast".  I updated that the entrance is shared.  It's amazing how convoluted this all is!

[John47]

@Chase68 
I'm going by a conversation I had with DOR about this and their intent was the smaller multi-bedroom home with common breakfast as one would get in a larger professional/commercial B&B.  I agree the 'breakfast' item is a bit vague but I (and I believe they) think it's more than just providing some supplies.
You listing does say separate entrance, BTW.  
I had asked about my Apartment and was told it didn't qualify for exemption.
If you want a definite answer, I would have Jen Desimone (her info is on some other of my posts here) review your listing and see what she/they decide.

[Nora690]

I also don't see where it says that breakfast needs to be in a common area. The mass.gov page only says that the rent should include breakfast.

And I don't see where a separate entrance is excluded or any mention of entrances at all.

As for what counts as breakfast, it is unspecified. When I talked to a DOR person, he seemed to think a continental breakfast would be fine. On the other hand, he didn't seem very clueful and had first told me that all B&B homes must be registered before subsequently talking to his manager and correcting himself even though I had started the conversation by very clearly saying I wanted to confirm that B&B homes ***as distinguished from B&B establishments*** were indeed exempt from registration or occupancy tax.

[John47]

@Nora690 
I don't disagree but know also that DOR is is charge of implementing the detailed rules/regs and based on the intent of the law, which I feel was to limit the exemptions to what would have been considered a tiny/small B&B before Airbnb began since that was a carryover exemption.

I had asked Jen @DOR about the breakfast and she agrees that no definition is given BUT I wonder if Sen Cyr & Rep Peake (authors of bill) would agree that leaving a box of granola bars/cereal and some coffee in a rental unit would be enough to qualify for that.

So I guess it will be up to DOR to decide if a given listing is or isn't qualified.

The problem I see is that the other parts of the law (like insurance) appear to apply to those rentals as well, even though the actual tax may not, so how would they get tracked if they're not registered?