SLO County works with Airbnb to ensure local vacation rental hosts are paying their fair share

TOT tag-team


THE TAX MAN COMETH SLO County is turning to Airbnb to help it collect occupancy taxes from locals who use the popular app to rent out their rooms and homes. - SCREEN SHOT OF AIRBNB.COM BY CHRIS MCGUINNESS
  • Screen Shot Of By Chris Mcguinness
  • THE TAX MAN COMETH SLO County is turning to Airbnb to help it collect occupancy taxes from locals who use the popular app to rent out their rooms and homes.

In order to collect unpaid taxes from vacation rental scofflaws, SLO County is turning to one of the biggest online rental services in the country for help.

After a year of negotiations, the county entered into an agreement with the San Francisco-based Airbnb to allow the online rental company to collect transient occupancy taxes and related assessment from locals using the service in unincorporated areas of SLO County.

County officials say the agreement, approved by the Board of Supervisors on Aug. 15, will help level the playing field between short-term vacation rental landlords who are already paying taxes to operate and those who do not.

"We want to make it fair for the people who are playing by the rules," said Justin Cooley, principal financial analyst for the county auditor and tax collector.

Under the county's current regulations, individuals who host or rent out short-term vacation rentals in unincorporated areas are required to file for a business license and collect a transient occupancy tax (TOT), also known as a bed tax, from guests. That tax, and other short-term rental-related assessment fees, apply to hotels, home rentals, and those who rent out rooms or homes online through services like Airbnb. There are currently 1,323 licensed lodging business operating in the unincorporated areas of the county, of which more than 86 percent are vacation rentals. In total, those business contributed more than $9.4 million in TOT taxes to the county's general fund last fiscal year.

But the county has struggled with how to identify residents who are hosting guests through services like Airbnb but aren't registered or paying the tax. When it comes to online rentals, Cooley indicated that many fail to pay the tax because they simply aren't aware of the regulations.

"A lot of people who do this don't even know they are supposed to collect taxes," he said. "They genuinely didn't know that they were required to."

Whether they do it knowingly or unknowingly, failing to pay the tax can skew rental prices against those complying with the county's regulations. Because hosts usually pass the cost of the tax onto the people using the rentals by increasing the per-night price, Cooley said hosts shirking the occupancy tax could charge rates as much as 12 percent less than those following the rules.

"We view it as unfair, and we want to remedy that," he said.

But trying to track down and collect was challenging and demanded a large amount of county staff's time and resources. It doesn't help that companies like Airbnb try to protect hosts' information, making finding out who is using apps to rent out rooms or homes time consuming. The county even hired an outside company, Host Compliance, in September to help them identify and track down unregistered online vacation rentals at a cost of nearly $72,000.

The agreement with Airbnb will allow the company to collect the occupancy tax and other assessment fees directly from hosts who use the service. According to Airbnb's website, the TOT will appear as a line item on the rental listing.

"Airbnb calculates applicable local taxes and collects those taxes from guests at the time of booking," the company's website states. "Airbnb then takes care of remitting collected taxes to the applicable tax authority on the host's behalf."

SLO County isn't the first government to hammer out such an agreement with Airbnb. The company is collecting occupancy taxes for several California counties, including Calaveras, Humbolt, and Marin counties, as well as cities in Nevada, Colorado, and others.

According to a county staff report, the online rental giant won't charge the county anything for the service and the agreement will be a win-win situation for both it and the county residents acting as hosts.

"The agreement not only ensures a level playing field, but also greatly eases the administrative burden for the county and individual hosts who choose to operate through Airbnb," the report stated.

Airbnb will assume its responsibilities under the agreement beginning Oct. 1. Δ

Reach Staff Writer Chris McGuinness at [email protected].


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