Pennsylvania State Hotel BACK Taxes

[Carrie1]

Got the below letter from the State's Department of Revenue last week.

I'd been paying income tax all along, and my city (Philadelphia) recently passed regulations requiring those of us who do short term rentals to pay the City's hotel tax, which Airbnb has recently begun collecting on behalf of hosts. The letter states that I owe back taxes for the State's Hotel tax, going back to 2013.

I wrote to Customer Service seeking guidance, and was pretty much referred to the terms of condition that state that hosts are solely responsible for obeying local laws, regulations, and for paying taxes. I absolutely want to pay whatever taxes I owe/operate within the law, but this seems excessive.

So, I now have to pay city and state hotel tax on top of income tax. I think taxes are now approaching 50% of income. Not to mention $2-3,000 in back taxes for renting out my one spare bedroom.

[Kevin-And-Pat0]

Down here in the Florida Keys ,Monroe county hired a vacation rental inspector in 2015. They were going after 2013,2014, cases first. Well they have an anonymous complaint procedure so somehow my first year i got reported. I think it was a contractor ,but how can i prove it if it is anonymous? So I called code enforcement when i see them post this notice on my property.The code enforcement OIC is Cynthia McPherson, 305-289-2810. Code enforcement officer Francie Boellard 305-289-2589, she says you can pay $2,000 fine. If you want to go thru a lawyer, it will be $3500 fine plus you have to pay your lawyer,too. I found some cases in the courts and most were settled for the lessor amount. It showed the magistrate hearings with fines of $3500 with the lawyer. I paid the $2,000 and went out of business. Well i was required to change rental period from daily and weekly to minimum of 28 nights.The law says, if you rent for 6 months or more no taxes will be collected.

The code enforcement takes anonymous complaints which leads to abuse. They file like 5 actions a month except December. So they shut down 55 rentals a year. Of couse the county and state will not get anymore tourism and state taxes on these rentals,but with over 10,000 rentals ,code enforcement is not going to shut 99% of them down.Strangely, google tourism taxes for Orange county Florida and you will see this county loves the millions of dollars of tourism taxes they get for rentals. There is no way Disney, Epcot and universal could exist without the thousands of vacation rentals in the area. There is not enough hotels to fill these theme parks up.

I was able to find out that the old laws were changed. Previously, they mailed you a warning letter. Now they do not and just slap a fine on you. You can look this up in the code enforcement complains online. Sometimes it is with the building permits and or building department online access . You might find your case. Sometimes a code officer will state who they got the complain from.

[Diane340]

I have a similar situation.  I am a host in Philadelphia and I received the same letter from the PA state Revenue department. They said Airbnb DID NOT submit the hotel and occupancy taxes before 7/2016 so they are billing me (with interest)!  Airbnb collected the taxes as shown under the earnings section. If they did not submit them then this is FRAUD!  I am waiting to hear from their tax people.  If this is indeed the situation then my current guests are my last!

[Steve14]

Welcome to the club. Imho, its AirBnb's job not mine to collect and remit any required taxes not let the home owners find out years later that they owe back taxes. In my case, several thousand dollars. Thanks for contacting the Penna Dept of Revenue with my information, Air BNB, you RATS! I have just unlisted my two AirBNB listings. it is not worth the huge hassle to have to get get a Business licence as a hotel operator (really - my spare bedroom?), pay quarterly taxes to State and City, collect and remit monthly hotel occupancy taxes. No thanks. AirBNB you can take this "sharing economy" business of yours and stuff it where the sun don't shine.

[Carrie1]

I got a response from Airbnb saying that they did not share information... so I don't know if the State went through the 1099's or if they have an "investigator" on staff that found out. It's really frustrating. And the response from Airbnb (other than to say that the State did not get the information from them) was to tell me how to go through my account to get the information (# of nights occupency & income earned) in order to report it.

[Scott-and-Ed0]

HI Carrie, 

I am in the same situation as you are, I have recieved the same letter. I simply filled out the form provided, i used the account number on my 1099 for first section and put in parenthesis see next page, in which i copied a few pages from my reservations and the occupancy tax that was collected. 

I then filled out the rest of the form truthfull with how long my listing has been up and revenue I made. 

I supplied my phone number and sent this in a few weeks back. I haven't heard from them, so not sure what the next step is there. 

I did file for an LLC for my airbnb listings to separate my indivual income from the airbnb earnings. 

Let me know if you would like to discuss furhte rat our next airbnb monthly meetup!

http://www.meetup.com/Philly-Airbnb-Meetup/

[Carrie1]

Scott & Ed: Thank you!

I just saw your post now. With the old Groups I always got notifications of messages, now, I only see them when I remember to go track down my old message... So annoying. I'd love to be a part of your group!

I'm so confused about the taxes, and my accountant doesn't seem to understand how it works, either. So frustrating!

[Melanie10]

I discovered this weekend that I too received the same letter from the PA Dept of Revenue. The thing is I have never hosted or even listed any properties in PA. I have hosted properties and paid income taxes on listings in NY State. I verified the 1099k's for the 2012-2015 all lisy my NY State address. I believe when I registered for Airbnb I supplied my PA State Drivers License and or a Credit Card with a PA billining address, this was years before I moved however.

[Kristen13]

So, after reading this helpful thread, I _just_ completed the comically complicated and vague PA-100 registration process to collect and remit taxes on my two listings.  I also figured out how to register on PA's eTIDES system for filing the returns and remitting the taxes.  Just got confirmation e-mails from the state that I'm all set up.

And, what do I find as of this morning?  Buried on the bottom of my location page in Airbnb?  A note that Airbnb will now be collecting hotel taxes on all PA listings!  Sure enough, looking at their tax page, PA is now there effective July 1st.  It wasn't there two days ago and I've received no e-mails from Airbnb notifying me of any change.

So.  That's annoying that I got caught up in this (new host as of May) at the very end.  I guess the upshot is I can personally pay the taxes for my bookings in May and June _AND_ for all of my booking that are made before July 1 (bookings made before July 1 for occupancy after July 1 don't have the tax on them, at least not as of this morning).  

For new hosts, this is probably very good news.  The state certainly didn't make being legal easy.  For existing hosts complying with the PA Hotel Tax laws on their own, this will be a change they need to manage carefully.  For existing hosts who were blisfully unaware of the law and as yet uncontacted by the state, may their bliss continue!

[Karin5]

So Airbnb collecting state taxes on behalf of hosts starting July 1 officially makes Airbnb legal in PA? Does this help anyone currently having issues with the local government regarding Airbnb? I live on my property and I rent to just one guest (single/couple/family of 4) so there are never more than 4 adults in my house during a stay...although my local government may not know all the facts, I do not think my property counts as a hotel, rooming, or boarding house". To them I am "operating a business in a residential zone" but I do not see how an occaisonal house-share qualifies as a business, although the guests are paying me, and I made no structural changes to the house to accomodate the guests.

[Rich3]

Airbnb collecting state taxes on behalf of hosts starting July 1 does NOT necessarily make renting on Airbnb legal in your county or municipality. That is a separate matter of county or local law, zoning etc. Your county/municipality may also have its own hotel or whatever tax, additional to the statewide 6% tax (7% in Phila and Allegheny counties).

[Karin5]

I remit taxes to my county quarterly, but as of now my municipality does not collect taxes

[Andresa-and-Roberto0]

Hi all,

Thank you all for sharing those info. I've just received the same letter.

So Airbnb is charging the hotel tax automatically?

Should I reply to the letter?

Thank you for your support.

Andresa

[Rich3]

Probably no one should reply to you with specific advice on whether to answer. If you are talking about the letter that comes with a questionnaire, I kind of doubt it makes a difference. See my posting below, I hope it helps.

[Rich3]

I just received (August 2016) the followup to the PA Dept of Revenue's "Activities Questionnaire" that they sent me out a few months ago and that I responded to.

This new letter is essentially a bill for what they think I owe for 2013, 2014 and 2015, based on my answers to the questionnaire and on "other information available to the department." The amounts that they list are precisely the same amounts that I see when I go into my Airbnb account's Transaction History and click on Gross Earnings, then Export to CSV so you can see all the details.

So, at least in my case, the Dept of Rev *somehow* obtained the figures exactly as shown by Airbnb, and there was no purpose in my filling out the questionnaire as far as I can tell.

In the past, Airbnb has -- according to others -- said that they do not share specific information (per host) to the city or state. However it's hard to imagine how the Dept of Revenue managed to find the *exact amounts* that are in my Airbnb transaction history. At first I thought OK, the state looked at what my Philadelphia hotel tax was and calculated from there. But that wasn't being charged in 2013. On top of that, the state's figure was equal to my entire Gross Earnings, not just the portion representing stays of less than 30 days, which is what Pennsylvania's hotel tax applies to. (To be exact, Philadelphia county's 8.5% hotel tax applies to stays of less than 31 days; a slight difference).

By the way, the Gross Earnings listed by Airbnb and used by the state *include* the host fee that we never receive. I would think that we should only be taxed on the money that we actually receive. I asked them to use the "Amount" column -- what's actually paid out -- instead of the "Gross Earnings" column...we'll see how that goes, seeing as this is an excise tax: http://www.pacode.com/secure/data/061/chapter38/chap38toc.html .

Anyway: *If you ever rent for 30+ day stays* you should check those figures in your Gross Earnings CSV and make sure that the state is only including stays of 29 days or shorter as your "Hotel Occupancy Services." Well, you should probably double-check them in any case before coughing up the taxes. The revenue people are really very nice when you call!

It appears there is a new page on revenue.pa.gov: 

SHORT-TERM RENTALS USING HOME-SHARING OR THIRD-PARTY BROKERS

http://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/Pages/Sales%20Use%20...

I hope that clarifies things!