Pennsylvania State Hotel BACK Taxes

Carrie1
Level 7
Philadelphia, PA

Pennsylvania State Hotel BACK Taxes

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. P1100309.jpgP1100311.jpg

 

56 Replies 56

Followup: Yes, they told me they are taxing the Gross Earnings listed by Airbnb (which includes the host fee); that means you can, if you want, write off the host fee portion as a business expense.

phone number in Harrisburg to call?   would be terrific to have that!

thanks.

Serena, in Philly

The phone number is on the correspondence that the Dept. of Revenue sends you. In my case it was the Discovery Division, at 717-772-2960 option 1.

I just got the same Letter with the "Activities Questionaire".

 

I am owner occupied (always on-site), sharing a room that has not been structurally altered.  Max amount of guests is 3.  

 

I am a low income artist.  This is an unbelievable burden.  Have contacted Airbnb.  Live in Pike County, PA.

 

Any further input or experience sharing sure would be appreciated.

 

BA

Contacted Airbnb via email over 3 days ago regarding this matter.  No response.  

 

This back tax payment which is new to me and apparently according to this thread very old news to Airbnb puts an unbelieveable hardship on me.  Airbnb is about to lose one of their long term super hosts.  SHAME on Airbnb.  Airbnb needs to step up to the plate on this matter!!!!!

I just got my paperwork as well and called in. Basically, unless you have stays of 30+ days, it sounds like we are all required to pay these taxes. They operate off gross income, not net, so all deductibles don't help bring the amount down. From what I asked, they don't offer a penalty waiver or amnesty plan. 

 

If anyone hears otherwise I'd love to get some more feedback. When I called the Harrisburg they explained everything in detail, but didn't offer any help on the overall tax bill that I'm required to pay. I stopped hosting a while ago, but definitely wouldn't start again under any circumstances. 

Yes, the law seems clear: the state tax of 6% (plus 1% in Phila and Allegheny counties) applies to stays of 29 days or less and applies to what Airbnb calls Gross Earnings. That includes the host fee even though you never lay hands on it. 

To me this means that you "paid" host fees out of the Gross Earnings that you report as income, and therefore the host fees are a business expense.

However I note that the state tax has been deducted automatically by Airbnb starting officially on July 1, 2016. You can check on that in your Transaction History under Gross Earnings. You should see a bump in Occupancy Taxes starting around that date.

I would think that the state will want us to pay the taxes for stays in Jan - June 2016. All I have to go on for that is the instructions at http://www.revenue.pa.gov/GeneralTaxInformation/Tax%20Types%20and%20Information/Pages/Sales%20Use%20....

Hi all, I'm new to hosting and reading up on this tax situation in Pa.  I see in my gross earnings Airbnb has claimed 6% occupancy taxes but this is my first month of hosting so I've not taken out any $ due me, and it seems neither has Airbnb taken out the tax money.  So my question is, does Airbnb take the tax money monthly or with each rental?  

 

Thanks,

 

Diane

If you look in Account>Transaction History>Gross Earnings you should see a column called Occupancy Taxes showing amounts that airbnb "collected from the guest and remitted to taxing authorities on your behalf."

For me, I can see by the amount that they have been doing this for both the local tax and the state tax since July 2016, and they've been doing it for each rental that is 29 days or less (the state tax does not apply to rentals of 30+ days).

Additionally for my PA colleagues:  Have you filed the form Pa 100?  Is it necessary?  I see my county, Butler, has a 5% hotel tax payable every quarter as well.  11% tax!  Yikes!  Do you build that into your fee or just what?  

I filed the PA 100 (a one-time thing) on advice from the PA Tax Dept (717 783-9369). Now I'm not sure if that advice was correct, as they also told me to file the PA-3 quarterly and pay the state tax that way, which I did for several quarters *before I noticed that airbnb has been collecting and paying that tax directly* since July 2016. 

So either I've been double paying, or there is a separate tax paid by the guest that is not the "sales and use tax" paid by the host. 

Obviously I'm not a tax expert. I would suggest that you call the tax dept yourself to get direct advice from them. If you find out anything interesting please let us know by posting here!

As far as building the tax into your fees, the way I see it is you are competing for business with other hosts and you have to be competitively priced regardless of the tax situation. So I don't really think about whether I'm building the tax in, I just charge what I can. For some people, the tax might just mean it's not worth doing any more...it's close to that point for me.