Room Occupancy Taxes

[Ruth544]

Airbnb is charging guests at our 3-room bed-and-breakfast in Massachusetts, a room occupancy tax which by law we are not required to pay.  I have gotten nowhere with Aiurbnb trying to resolve this problem.  I feel this is a fraudulent charge which guests should not have to bear.  I see some mention of hosts charging the tax to guests manually, not asking Airbnb to collect.  It would seem a simple task to add that option to our listing information - "do you want Airbnb to collect any taxes due for you, yes or no".  Then I could say no, guests would not be charged, I am not liable, Airbnb is not liable, and guests are saved a considerable amount of money.  Why can't someone answer this issue?

Ruth @ The Seagull Inn in Marblehead, MA

[JD29]

Hello Ruth, Thank you for your response. If I edit the listing to be "bed and breakfast", does this require to file for any kind of business documents? 

[Susan151]

@JD29 You don't have a Massachusetts property, so your interest in how we are managing our new laws is not really logical. Florida laws are different.

[Nora690]

@Ruth544 @Susan151 I am still interested in knowing the answer to @JD29's question for MA folks.

[Chase68]

I've now entered this vortex.  It seems we qualify as a Bed&Breakfast Home.  However, do I still have to register with MassTaxConnect and get some sort of number to give to ABB?  Also, I tried to find if any of my recent guests have paid any tax, followed the directions from ABB, but found no mention of taxes collected.  Any help would be much appreciated!

[Ruth544]

Hi - we changed our property type to "bed and breakfast" the end of September.  We only have two bookings made after that date, and they are upcoming.  I see by going to Gross Earnings that previous guests were charged occupancy tax, but can't find any accounting for upcoming guests.  I'm hoping that they weren't charged.  When I go in and start a fake reservation, I'm charged no tax, so I'm hoping all is well.  We are in Massachusetts, and we are exempt from tax, and do not have to file for a number.  Not sure what the case is in NY.  

[Nora690]

Can someone please answer the question of whether calling oneself a "bed and breakfast home" requires any kind of business incorporation or other licensing requirements? Airbnb only seems to have an option for "Bed and Breakfast" without distinguishing between "B&B homes" and "B&B establishments" as MA DOR explicitly does.

Can people (as in humans, not corporations) start operating a B&B home without any licensing requirements? Do cities (as opposed to the state) have licensing requirements for B&B homes? Is a B&B home (distinct from B&B establishments) even a thing recognized by local governments?

It seems very strange for the MA STR laws to specifically exempt B&B homes. Whether or not breakfast is included in the rent seems like a peripheral concern to the recent STR laws. What is the intent of this exemption? 

[Nora690]

I found the answers to some of my questions above from MA DOR. A B&B home needs to be owner-occupied where "owner" is a person. Whether or not there is also a business entity incorporated is orthogonal.

No idea still what if any other state or local government licensing requirements there might be for B&B homes. It's outside the scope of DOR.

The intent of the strange exemption in the new law is that small B&Bs used to be exempt earlier, so they preserved it, for now at least. The law might be modified in the near future to revoke the exemption, especially if people abuse it to circumvent taxes.

[Ruth544]

To add to the conversation, Nora, we are in Marblehead, MA.  When we opened our home as a B&B 26 years ago, it was suggested by the local Chamber of Commerce that we get a town business license, I believe $40 for three years, which we have renewed as necesary.  We needed that license to open a bank account to deposit checks made out to The Seagull Inn.  But there was no state requirement for licensing.  When I researched the laws thoroughly, perhaps a good 15 years ago, they stated that a bed-and-breakfast home with 3 rooms or less, in addition to being exempt from room tax, did not have to be inspected as long as they served a continental breakfast, and they listed the "low risk" foods that were allowed - i.e., hard boiled eggs were OK, purchased cheeses, cereals and breads, baked goods, fresh fruit, but no cooked-to-order breakfasts the way a restaurant would.  And our town officials told us we were only allowed to serve a continental breakfast.  Not sure whether these rules are still stated - I just read the part that we were still exempt from room occupancy tax. 

[Aron22]

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[Kathleen126]

In my research years ago, I found that the B&B Home has always been regarded as a separate entity under Mass Law.  It has 'enjoyed' a special status with regard to multiple provisions, including the collection of taxes.  It was logical that this special exemption be extended to the recent Occupancy Tax Law, however it was not certain.  Thankfully, the B&B Home as defined in Mass Law,  is exempt.  To the best of my non-legal mind, there is no statutory requirement that you formally set up as a corporation, but most towns usually have some type of licensing requirement.  It is there you would be sure to define yourself as a B&B Home, should the matter ever come into question.  My B&B Home is both a licensed B&B in the town and a registered LLC in the state of Massachusetts.