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Technology & Entrepreneurship

Hotel Association Attacks Airbnb On 'Secret Tax Deals'

Katie Haugland Bowen (CC BY 2.0) Flickr http://bit.ly/2niNeOC

A leading hotel industry association in vacation rentals said Tuesday the online rental website Airbnb is strong-arming local governments in secret meetings to get favorable tax deals.

Airbnb defended its use of a "voluntary collection agreement," which allows the company to collect and pay taxes for property owners using the site. In a statement, a company spokesperson called the claim misleading citing multiple websites that had posted the VCA terms with different local governments.

Officials from the American Hotel and Lodging Association, which represents 25,000 members, said the tax deals Airbnb made with local governments are unfair to their members and the public.

“We’re just asking that there be consistency and a level playing field when it comes to businesses paying their taxes. It’s that simple,” said Troy Flanagan, the association’s vice president of government affairs.

Airbnb said in a statement that hotels first complained Airbnb wasn’t paying taxes, and now that the company has paid a half a billion dollars through its own agreements, hotels have "changed their tune."

Flanagan said there were many problems with the VCAs. Among other things, by anonymizing data they make it impossible to audit the paid taxes. They prevent governments from gaining and sharing data on who is a short-term renter, and they force cities and states to forgive back taxes.

Airbnb have more than 370 agreements with local governments in the U.S, including with the state of Texas, which the company points out are voluntary and allow governments to collect valuable revenue that would not otherwise might not be paid.

Texas Comptroller's office spokesman Kevin Lyons said in a statement that the state did waive taxes on Airbnb prior to May 1 of last year.

Lyons said because Airbnb doesn’t own the properties, “Airbnb may not have been liable for back taxes to begin with.” However, he added, the agreement does not waive taxes from property owners using Airbnb prior to last May 1.

“We have not yet audited Airbnb,” he said.

But the agreement with Airbnb requires more information than the anonymized data during an audit.

“The comptroller’s office has the ability to look at the financial records and verify the taxable liability of Airbnb,” Lyons said.

San Antonio city leaders have been struggling to pass regulations around STRs for more than a year. The company began collecting and remitting taxes through the site for the state last May, but didn’t provide the automatic service to the city. The city estimates 290 properties are paying the Hotel Occupancy Tax voluntarily. Estimates of how many properties are operating as STRs range from the city's estimate of 1,700 to 2,300, according to the website AIRDNA, which provides data on Airbnb properties.

May 1 marks a year for Texas’ VCA with the company. The state has collected more than $12 million, according to data from the comptroller’s office.

“We believe it is a good deal for the state,” Lyons said.

Paul Flahive can be reached at paul@tpr.org or on Twitter @paulflahive