Airbnb isn’t exactly a hotel chain, but the home-sharing start-up sure is acting like one these days.
First Airbnb CEO Brian Chesky told Fast Company that his company will roll out a cleaning service this summer for hosts. Airport transportation and a new way for users to hand over keys are also reportedly in the works. Now Airbnb is working with San Francisco and Portland officials to help hosts pay occupancy taxes on their room rentals.
Like most sharing economy start-ups, Airbnb has taken a lot of heat for not following the same rules as more conventional companies—namely hotels. City regulators have taken Airbnb to task for not helping hosts pay the occupancy tax that other short-term lodging companies have to pay.
The tax collection effort is part of Airbnb’s new Shared City initiative, which appears to be the company’s way of making peace with city officials instead of constantly butting heads over rules and regulations. If it's successful, the new tax collection efforts in Portland and San Francisco could pave the way for similar negotiations in the other 31,998 cities where Airbnb hosts live.
Airbnb’s ambitious tax plan
Chesky announced last week that Portland was the first Shared City, a partnership that sounds stereotypically Portland but actually involved changes to the city’s zoning code that would officially allow short-term rentals, making tax collection on those newly legal rentals a lot easier.
Airbnb will reportedly collect an 11.5 percent tax on Portland rentals. San Francisco on Monday joined the Shared City initiative, meaning that Airbnb told its hosts there that they can expect to pay the city’s 14 percent hotel tax. Those discussions are ongoing, because Airbnb doesn’t believe that its hosts run hotels, and shouldn’t be taxed at the same rate as a Four Seasons.
“Of course, we don’t always agree with governments about what sales and occupancy taxes are owed under the law, if any,” said David Hantman, Airbnb’s head of global public policy, in a Monday blog post. “Our hosts are not hotels, and most of these tax laws were not designed for them. But whether or not we agree with the tax laws, we want to help our hosts follow the rules. It’s good for the government officials who won’t have to identify hosts and collect the taxes themselves: we’ll do the work for them. And it’s good for hosts who want to pay their fair share.”
The main problem with Airbnb’s tax collection efforts is that the company operates outside regulations in many cities. If other local governments follow Portland’s lead in creating a new business classification for companies like Airbnb, hosts wouldn’t have to wonder how to pay taxes—or how much they owe per rental.
Letter to New York
Airbnb is desperately hoping that its new tax collection efforts in Portland and San Francisco will appeal to officials in New York, who so far haven’t been buying what Airbnb is selling. Airbnb has trotted out sympathetic hosts, commissioned economic impact studies, and most recently penned a plaintive letter to New York City Mayor Bill de Blasio asking for his support, but so far, the city has taken a cautious stance on the start-up.
In its letter to the city, Airbnb estimated that New York could take in more than $21 million in taxes from hosts if lawmakers would only change the laws on short-term rentals that make Airbnb rentals effectively illegal. (Not that the rules have really stopped anyone.)
According to the Wall Street Journal, Airbnb also told De Blasio that the taxes its hosts paid could be used for housing assistance for the homeless.
It’s unclear if appealing to De Blasio’s soft spot will smooth over the rocky standing Airbnb currently holds in New York, but if the Shared City initiative proves successful, New York might not have a reason keep up its fight against the start-up.
This story, "Airbnb tries to prove it's legit by helping hosts pay taxes" was originally published by TechHive.