Regarding Airbnb's handling of Occupancy (TOT) taxes.
I manage multiple listings under the same account. When I set up the first listing, I was prompted to enter a tax rate, and taxes were collected from renters and included in the payouts to the listed account. Those funds were then remitted to the local tax authority by the owner. About a year later, when I set up the second listing, no such option was available to input a tax rate. Instead, there was a notice indicating that taxes for the county this listing is in were collected and paid directly to the tax authority by Airbnb. Since I was not seeing the taxes flow through for reservations at this listing, despite it being in the same city as my first listing, I contacted Airbnb support, where they confirmed that the county was one where the taxes are paid automatically, and assured that the net payout would remain the same. I then asked for some kind of report providing the details of what was paid. After literally weeks of calling, writing, disconnects, and closed threads stating "this issue was the topic of prior threads, this thread is now closed" I was finally informed that the taxes are paid in aggregate and they could not provide detail on a listing by listing basis. Since I'm still responsible for filing taxes on a monthly basis, I continued to press for this detail, with similar fruitless results. Finally, I got a response. After months of relying on their previous advice, I was told that, while taxes were collected for listings in the County, they were NOT collected for the specific municipality in that county where my listing is located. Aside from the obvious problem of not having collected or paid the proper taxes for tens of thousands of $ in prior rentals, there isn't a mechanism to collect taxes going forward. This leads me to a number of critical questions for Airbnb:
- Why does Airbnb collect taxes for one of my listings but not the other, when they’re both in the same city?
- For every other county in California where Airbnb collects and remits taxes, it lists the specific municipalities in that county where it does not collect taxes, except for Riverside County where it does not list any specific cities. Given that Palm Springs is one of the most popular vacations destinations in the state, why would it omit that information?
- Why did Airbnb remove the option to enter a tax rate for properties in areas where it still needs to collects taxes? How are hosts supposed to specify a tax rate for Airbnb to collect?
- If the answer to the previous question is “through the resolution center” then how is that possible given that Airbnb doesn’t route resolution center payments (including taxes) to the account associated with each listing, but rather dumps them all into the default account?
- The tax rate here just increased by 1.5%. How can I change the rate for the property where you do collect and pass through taxes, when there is no longer a way to edit the tax rate currently being applied?
- Why weren’t any of the support personnel able to correctly answer my simple question about whether taxes were being collected and remitted for this property?
This is going to cost me thousands in now-uncollectable taxes and penalties and put my entire business at risk. Is anyone else facing similar issues with the way taxes are being handled? I've brought these issues, as well as specific recommendations for what needs to be done to fix these issues, to Airbnb's attention via emails to support, but have yet to get any kind of response.
These are basic tax and fee collection and reporting tools that every business, particularly multinational businesses operating in many different tax jurisdictions has to deal with. I’m frankly astounded that Airbnb has been able to operate as long as it has without this functionality. None of the changes suggested here should be difficult to program or implement, nor are any of these changes controversial or beneficial to only one small group of hosts. Here is what I think Airbnb needs to do to help hosts struggling with this issue.
- Provide a way for hosts to define multiple taxes rates and fixed gov’t fees (with start and end dates for each tax rate or fixed fee to accommodate special or seasonal taxes.)
- Include all applicable taxes and fees on quotes to prospective renters.
- Clearly indicate, for each municipality, whether it remits collected taxes to the taxing authority, or whether collected taxes are passed through to the hosts for payment.
- Provide basic period reporting for all taxes collected for each listing (whether passed-through or remitted directly)
- Route all pass-through taxes to the proper listing for which the taxes were collected, rather than to the “default” listing for a given account.
- Provide a mechanism to define optional services that may apply to a rental, the fees for those services, and whether or not these services are taxable; Allow the host to indicate which services the guest has requested at the time a quote is generated for each rental, not as an after the fact “resolution.” All fees and taxes collected should be routed to the bank account associated with the listing for which the fees were collected, not dumped in the “default” listings bank account.
- Provide a way for support personnel, as well as hosts, to see exactly what charges, taxes and fees are applicable to their property based on its location, as well as reports indicating the taxes previously collected and remitted.
Your comments and feedback on this issue are welcomed.
