Airbnb “Tax collection” policy announced in 2016 tool box document
Shared economy platform giant, Airbnb, announces a series of four steps for local communities and cities they can take to regulate their short-term rentals.
January 9, 2017 - Author: Andy Northrop, Andy Northrop, Michigan State University Extension
Since Airbnb was founded in 2008, more than 140 million guests have been hosted in almost 200 countries. Airbnb is a person-to-person webpage designed for hosts to generate income by marketing and offering space in one’s home to travelers. This successful business method has grown out of the sharing economy popularity since its inception in 2008. Since then Airbnb has seen a demand grow for solutions to some of the challenges communities face with short-term rentals. Late last year (December 2016) Airbnb announced the release of a 31-page report titled, “The Airbnb Policy Tool Chest”, outlining a four pronged approach to working with local governments on short-term rentals. This is the first of its kind by the company. Through several years of experience around the world Airbnb offers “insights gained, lessons learned, and policy options developed through hundreds of collaborations with policymakers across five continents…”
The Airbnb Policy Tool Chest addresses four areas related to short-term rentals: Tax collection, Good neighbors, Accountability, and Transparency and privacy. This article of the 5 part series specifically addresses “Tax Collection”.
One of the challenges with using shared housing platforms is establishing a user tax and collecting it; traditionally, “bed” taxes or “hotel taxes” are collected from hotel rooms and those dollars fund tourism marketing initiatives to keep beds full. Some communities allowing Airbnb have been successful at establishing an “occupancy tax” from hosts and those dollars replace dollars lost if guests would have used a traditional hotel. Examples include San Francisco, Austin, and Portland.
Airbnb, in their policy manual, developed, “The Voluntary Collection Agreement (VCA), to ensure that proper taxes are collected and remitted while relieving hosts of onerous tax filings and governments of the burden of collection and enforcement.” A VCA can be signed between Airbnb and local government, which then Airbnb collects taxes from local hosts and remits tax revenue directly through the proper tax channels in that specific community. (Please refer to their manual for more specifics.) This is a new approach governments are taking when working with Airbnb. Some cities, such as Austin and San Francisco, have been successful at leveraging this tax. In Michigan, local government only has the power to do what the legislature specifically delegates, or enables local government to do.
On page 3 of their report, Airbnb makes an important distinction though for communities looking to this tool for answers in that, “this is not a one-tool-fits-all policy prescription for model legislation. Rules that work in Portugal may not make sense for Philadelphia, yet both places leveraged these policy tools to enact regulations that enable home sharing to thrive, to their immediate and long-term benefit.” (A link to the actual report is available here.)
Michigan too has its own challenges and unique state laws on this topic. Some of these solutions may seem appropriate it is wise to consult your local experts involved with planning and zoning, as well as tourism development. Those in Michigan State University Extension that focus on land use provide various training programs on planning and zoning, which are available to be presented in your county. Contact your local land use educator for more information. In addition, MSU Extension also provides various programs on tourism development in partnership with land use experts across Michigan.