Massachusetts New Guest Tax???

Answered!
Ken-and-Kathleen0
Level 2
Pittsfield, MA

Massachusetts New Guest Tax???

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. 


1 Best Answer

@Julie1751 
1) Airbnb doesn't require permission to remit tax because they are required by law to collect & remit as they are the intermediary.

2) You as host as still required to register with Mass Tax Collect for other parts of law and should you get a rental directly (maybe a repeat guest?), you'll need to collect/remit it.

3) They are (as i understand it) doing the payments in 'bulk' without any linkage back to individual hosts.

View Best Answer in original post

161 Replies 161
John47
Level 9
Chatham, MA

FYI: If a guest cancels and never actually stays (takes occupancy), any penalty/payment that guest made is NOT taxable so not sure how Airbnb will handle that situation.

I had an off-line reservation that was cancelled and I was wondering about tax on the deposit that I kept as a penalty and asked Jen @ DOR who confirmed that if they don't stay, they don't pay (tax). But given how badly Airbnb has implemented the tax, have doubts as to how they will handle similar as guest pays up front for all fees and taxes.

HI! I am just joining in this thread. Better late than never. I received this email from Airbnb regarding the question of taxes. I am told the taxes were collected from my last rental (but only 8% not enough to cover the local East ham taxes) and so I questioned how I was getting credit from this tax collected as it appears that Airbnb is submitting as a lump sum for all rentals. This makes no sense to me. Do I still list this rental income with Massachusetts DOR under my individual operator number and if so won't it show an outstanding payment as airbnb paying a lump sum for all rentals in East ham. See the airbnb response below. Can anyone clarify for me. Thank you. 

 

Jasmine C, Sep 9, 13:04 PDT:

Greetings Suzanne,

My name is Jasmine, and I work here with Airbnb. To my understanding, you contacted us regarding the occupancy tax collection and remittance by Airbnb in Massachusetts.

In certain areas, Airbnb has reached an agreement to collect and remit occupancy taxes, so the tax is assessed automatically by Airbnb. The amount of the tax is shown to guests as a line item on the listing page and again on the booking page.

Airbnb has entered into a voluntary collection agreement with the local tax collector in Massachusetts. We will be filing one tax return per jurisdiction, with the total combined reservation revenue. 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. This means that when Airbnb reports these amounts, we do not use your certificate number. Taxes are reported under Airbnb tax ID number.

Occupancy tax collection and remittance by Airbnb in Massachusetts:

State of Massachusetts

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

State Excise Tax: 5.7% of the listing price including any cleaning fees and guest fees, for reservations 30 nights and shorter for Short Term Rentals and reservations 89 nights and shorter for professional listings. For detailed information, visit the Massachusetts Room Occupancy Excise Tax website.

Local Option Excise Tax: 0-6.5% of the listing price including any cleaning fees and guest fees, for reservations 30 nights and shorter for Short Term Rentals and reservations 89 nights and shorter for professional listings. For detailed information, visit the Massachusetts Room Occupancy Excise Tax website.

Cape Cod and Islands Water Protection Fund Excise Tax. 2.75% of the listing price including any cleaning fees and guest fees, for reservations 30 nights and shorter for Short Term Rentals and reservations 89 nights and shorter for professional listings. This tax currently only applies to reservations in certain locations. For detailed information, visit the Massachusetts Room Occupancy Excise Tax website.

Convention Center Finance Fee. 2.75% of the listing price including any cleaning fees and guest fees, for reservations 30 nights and shorter for Short Term Rentals and reservations 89 nights and shorter for professional listings. This tax currently only applies to reservations in certain locations. For detailed information, visit the Massachusetts Room Occupancy Excise Tax website.

----------

Your local tax office can share more information about the Voluntary Collection Agreement with Airbnb and how this process may affect your tax reporting. For example, some areas request that hosts fill out worksheets indicating the amount that has been paid on their behalf.

Should this be the case for you, you can always refer to the “Gross Earnings” section of your “Transaction History” for a reservation by reservation breakdown of amounts that have been remitted on your behalf. Please take note that tax collected will not be reflected here until the payout is released. For your convenience, if you are logged into your account, you may view these amounts by clicking on the link here:

https://www.airbnb.com/users/transaction_history/#future-transactions

Here are the details on the amounts being accounted for in Massachusetts:

https://www.airbnb.com/help/article/2587

For more information about it, check out our Help Center article:

www.airbnb.com/help/article/653

Your local tax collection official and/or a local attorney may also be able to provide additional information or advice about your personal situation.

If you have any further questions, please reply to this email.

Best,

Jasmine
www.airbnb.com/help

@Suzanne-And-James0 

Welcome to the thread! I have made various posts here that should address your issue but to quickly summarize: 

1) you're not responsible for the collection or remittance of tax on any AIRBNB rental 

2) you're not responsible if they don't do it properly (but if you know they are doing it wrong, you could notify DOR to make them aware)

3) you don't list any rentals via AIRBNB on DOR filings, just those paid directly to you. If none done directly, you don't need to file that month.

Does that help? I am basing my answers on emails from Jen @ DOR, DOR website, other websites and my own research.

Addendum: it's best to use the @ tag to notify someone here.

Also, by November 1, you will need to provide your certificate number to AIRBNB. 

 

Update #2: you don't get credit for rental done via AIRBNB as, in effect, it's as if they rented directly from them, not you, for this type of tax. 

My comment regarding refunds was for those done directly to me, but was also related to wondering how/if AIRBNB was doing it correctly also.

@John2979 

Hi John! Thank you for your response. I did also reach out to Jen at DOR based on your recommendation. She is great! Thank you for her name and email information. She agreed that all taxes from rentals handled through Airbnb are going to be remitted by Airbnb and they will use my social security number or certificate number to identify me. I should not list any rental on DOR.  My problem is that Eastham has a 12.45% tax and Airbnb only collected 8% on my last rental in August. When I told Airbnb they were short , they instructed me collect the other 4% from the guest through the resolution center. The guest was great and paid me the 4%, Now I am wondering what to do with this money....return to the guest or pay the state of Mass. I will need to ask Jen. Also..do you know where or how I provide my certificate number to airbnb? I could not find this on their site. Thanks so much for all your help. 

@Suzanne-And-James0 
GLAD I was able to help you!
1) I don't see any way that ABB should be collecting 8% as it's 5.7% for MA + 4% Eastham + 2.75% WW fund so if they didn't collect Eastham's 4%, still should have been 8.45%, not 8%.

2) My best guess would be that the 4% should go back to guest because it probably wasn't calculated properly since it HAS to be based on ALL fees, including booking fee, which you probably don't know the amount of (unless it was Special Offer, when host is shown it briefly).
I would verify with Jen since technically ABB is required to pay it to DOR.

3) There's NO way that ABB should have told you to collect the 4% but then again, their CSR on this topic has been lousy at best.

4) Certificate nbr field is sorta a "coming attraction" feature on site based on email from them.

@John47 Hi John! You are correct. I misspoke. Airbnb collected the 8.45% tax but not the full 12.45% tax for the Cape and specifically Eastham. When I called Arbnb they told me to collect the other 4% through the resolution center.  So I did and my guest graciously paid. Now I have this money sitting in the savings acct waiting to distribute. I did reach out to Jen again today to explain this new issue. I also had another rental in August that booked in early Feb through Aribnb. At that time Airbnb was not collecting the tax and told me to collect the full 12.45% so again I did through the resolution center. Again this money is sitting in savings waiting to distribute. At this point my question to Jen is should I return the money to these guests and let airbnb work this out! I will keep my eye out on the certificate nbr field in Airbnb. Thanks for your valued help!

@Suzanne-And-James0 

You're welcome!

As I said before, since you most likely do not have access to the total paid by guest, including the 12+% booking fee (which has to taxed!), you're unable to properly compute the true tax amt.  

Plus, since AIRBNB is responsible for these taxes, I am concerned they may now go after guest to get that money.

So with both of the situations, that's why I would highly suggest returning it to guest...but...how to get them ALL of what they paid back as they shouldn't loose the 3% credit card fee that was charged because the entire transaction between you and guest should be voided as if it had never occurred, IMO.

Leslie452
Level 2
Massachusetts, US

They don’t call it Taxachusetts for nothing! 🙂 

-fellow MA resident here 


@Leslie452 wrote:

They don’t call it Taxachusetts for nothing! 🙂 

-fellow MA resident here 


Fairly inaccurate these days however.

Susan151
Level 10
Somerville, MA

Just found this tip and it does work to remove the tax if you are exempt. It doesn't accurately describe my listing, but I will use this until AirBNB comes up with something better.

 

https://community.withairbnb.com/t5/Help/Room-Occupancy-Taxes/td-p/1093143


@Susan151 wrote:

Just found this tip and it does work to remove the tax if you are exempt. It doesn't accurately describe my listing, but I will use this until AirBNB comes up with something better.

 

https://community.withairbnb.com/t5/Help/Room-Occupancy-Taxes/td-p/1093143



Hello Susan, I just tried changing the setting to bed and breakfast which would reflect what our apartment is. That being said, it is its' own entire apartment, not rooms in a house. It wouldn't be accurate as well. So is it then NOT qualified as a Bed and Breakfast?

Also, how does Airbnb review this? Have they contacted you?

"This listing will go through review
A Bed & Breakfast on Airbnb should be a licensed hospitality business and will go through review to make sure it meets our criteria. This helps listings appear in the right searches and lets guests know what to expect."

@Katrin115 
Based on your description here of listing (I didn't look at it on site), I would believe that your apartment does not qualify for the exemption. As the law requires it to be: 1-3 rooms in owner occupied unit and breakfast is supplied (though no description of breakfast is given, i don't think leaving supplies in apartment would qualify).
As to that ABNB description, that is true for a "B&B establishment" under law that it be licensed (as I know it), but not for a "B&B home" which is the exempt variant but as ABNB has yet to provide any way to qualify which of the two is applicable, and one is taxable and one isn't, using the @Susan1849 method is the only way for B&B homes to get un-taxed for now. 

Got it! Bummer. We are owner-occupied and I leave coffee, tea, fresh fruit, snacks for the guests...

@Katrin115 
Remember, I'm just another host BUT have been in touch with DOR multiple times and think I may "know more than average bear".

I believe because it's a separate apartment though within your building is what disqualifies it as B&B implies rooms with same common entrance, common rooms, etc.
Add to that, with breakfast not being served in a common location, that would also make it less of a true B&B home.

Dear John, did DOR explicitly say something to you in writing about how exactly breakfast must be served and about the nature of entrances in B&B homes? If so, could you share the text from that email or share a link to any other publicly available text providing more guidance about 830 CMR 64G.1.1? Thanks.

 

PS: Your posts are very helpful.