Our local sales/lodging taxes periodically go up as various government entities continue to discover more ways to extract revenue from non-voting tourists.
I use the pass-through tax feature (Airbnb collects taxes on my behalf and then passes them through to me for remittance).
For the latest round of tax increases, we didn't actually get much more than a few weeks' notice from the county (they apparently passed the increase this spring but didn't mail notices until about a month before the increase went into effect--my fault for not paying attention to county commission minutes, I guess!), so by the time I went in and adjusted the taxes, we already had several bookings at the old, lower tax rate. Of course, when I go to report revenue and remit the taxes to the taxing authorities, they don't care when the reservation was booked, so I end up paying the tax at the higher rate even though I collected the lower rate.
It usually isn't a huge deal, since the tax increase is usually announced well ahead of time, and since I run smaller units, I don't book very far in advance (pre-COVID, my average lead time was 20 days), but even so, this month I ended up having to pay about $20 out of pocket more due to the increase. Not much, but every dollar counts in these times.
I'm wondering how the community handles these things (and what Airbnb supports/allows). I see a number of options, but they all have pros and cons:
- Just continue absorbing the difference myself as it's usually not huge (con: costs me a few lunches worth of money once a year or so)
- Change tax reporting methods and report on a Cash basis (e.g. when I actually collect the funds) instead of on an Accrual basis (when the reservation is consumed) (cons: significantly complicates reporting for bookings with split payments or subsequent cancellations/refunds, doesn't actually resolve the issue for Airbnb reservations because I don't collect the funds until the stay commences anyway)
- Manually fudge the revenue numbers I report so that the taxes due match what I actually collected (con: potentially illegal)
- Talk to the tax reporting agencies and see if they have a procedure for accounting for original sale date instead of item delivery date
- Attempt to collect the increased taxes from the guest (e.g. via Airbnb Resolution Center) (cons: potentially angry guests, potentially not allowed by Airbnb?)
What do other hosts do in this situation?