By Emily Badger
In mid-February, the short-term home rental service Airbnb will begin collecting taxes on behalf of residents in the District who treat their homes — or single rooms in them — as a makeshift alternative to hotels. With the voluntary agreement, the District joins a handful of cities where the tech company has worked out tax deals to resolve at least one of the thorny problems posed by a business model that has turned thousands of people into innkeepers in their own homes.
These agreements could mean millions in additional revenue for cities where residents using Airbnb and other web-based services like it have been unaware or baffled by their legal obligation to pay hotel taxes. For Airbnb, the promise to remit that money straight to city coffers will help legitimize a service that in many places is still not strictly legal.
In the cities where Airbnb has agreed or been required to do this, it will automatically collect the local hotel or occupancy taxes, which run from about 5 percent to 14.5 percent in the District, on every transaction. Airbnb will then pay the cities in a regular lump sum, omitting details about individual hosts or guests.
Airbnb began collecting these taxes in Portland, Ore., last July and in San Francisco in October. Between those two cities so far, the company says it has already paid about $5 million in taxes (it has not put back taxes on the table anywhere). On Feb. 1, it will also begin doing the same in San Jose and Amsterdam. Feb. 15, it will start collecting taxes in the District and Chicago. All of these cities are among the company’s largest markets.
“In many cases, these taxes were designed for hotels and folks with teams of lawyers and accountants, and the reality …read more