TALLAHASSEE — The Florida Department of Revenue and tax collectors in Pinellas and four other counties have signed agreements with online home-booking agency Airbnb to collect and remit potentially millions of dollars in tourist-tax revenue that until four months ago went unpaid.
Those agreements mean that people seeking a break through Airbnb on the rising cost of hotel and motel rooms will be paying more per night because state and local tourist taxes will be tacked onto their bills.
But on the other side of the ledger, how much the online home-booking agency will be collecting and turning in each month remains an open question because of Airbnb’s insistence that the names of people renting out property on its platform be kept secret.
Airbnb even insists that its agreements with government agencies remain secret. And it wants the state and counties to forfeit any potential taxes owed prior to executing the agreements.
That doesn’t sit well with Hillsborough County Tax Collector Doug Belden, who cites the requirements of Florida’s public records law — Chapter 119 of the state’s statutes.
“I am not signing anything until I get a complete legal review from our legal office,” Belden said. “We have concerns about certain parts of the language that deal with public records, and I don’t want to sign anything that violates Chapter 119.”
All tax collectors should have a problem “swallowing that pill with regard to cutting a check every single month but not telling what that check is made up of,” Polk County Tax Collector Joe Tedder said.
On the other hand, Tedder said, this is a new business model that authorities must learn to deal with. His office is talking to Airbnb about reaching an agreement both sides can live with.
“If we ignore it, there is going to be money left on the table,” Tedder said. “For me as an elected official, the policy decision is, ‘Do I stick my head in the sand and lose money or cover as many bases as I can and move forward.’”
Airbnb has every intention to get its hosts to pay the taxes they owe, said Christopher Nulty, public affairs lead for Airbnb in North America.
“Our community wants to be paying the taxes and we want to make it easier for them,” Nulty said.
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Airbnb has grown dramatically in the eight years since it was founded in 2008 by two San Francisco techies looking to make money by renting out air mattresses on the floor of their loft with the promise of a home-cooked breakfast.
The online platform they developed brings together people with places to rent and people looking for a unique and economical place to stay when they’re on vacation. Airbnb makes its money by taking 3 percent from the host and charging the guests a 6 percent to 12 percent service fee.
The company’s growth and popularity has given it a big slice of the vacation accommodation pie, with close to $900 million in sales last year and more than 2 million listings in 191 countries. That adds up to 80 million nights booked — more rooms than several large hotel chains combined.
But in the face of regulatory hurdles and pushback in places as far flung as Tokyo and New York, Airbnb has begun a campaign to get state and local governments to sign these “voluntary collection agreements” as part of a two-year mission to legitimize the company as it raises capital in anticipation of launching an initial public offering of company shares.
“To be regulated is to be recognized,” Nulty said.
To date, Airbnb has agreements with 150 governments around the globe, including the U.S. cities of Chicago, San Diego, San Francisco and Washington, D.C. Airbnb has collection agreements with six states including Alabama, North Carolina, Washington and Florida.
“We are working with any city that will work with us to develop clear rules around home sharing, to share anonymized information with cities about how people are using the platform and to collect and remit taxes,” Nulty said.
Airbnb is the only company occupying this niche that is pursuing agreements, Nulty said.
As far as anonymity goes, he said, “We take the privacy of our hosts and guests very seriously, but we also want to work with cities and counties so that they have the tools they need.”
The agreement with Florida, which took effect Dec. 1, is for the collection of the statewide 6 percent transient sales tax, as well as the collection of tourist development tax revenue in 22 counties that don’t collect their own tax revenue.
The home-booking company also has a separate agreement with Pinellas to collect and remit its tourist development tax, which took effect Dec. 1. Last week, the company announced similar agreements with Brevard, Lee and Orange counties that take effect this month, and an agreement with Hernando County that begins May 1.
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Now, when guests book a room in Florida, they’ll also pay the 6 percent state hotel or transient sales tax and whatever local tourist development taxes also apply.
Airbnb began collecting taxes Dec. 1, but the amount they’ve collected and remitted to the state is confidential, according to a statutory exemption on information contained in tax returns and accounts, said Renee Waters, spokeswoman for the Florida Department of Revenue.
The state collected more than $1 billion in hotel and motel room sales tax revenue in 2015.
The Department of Revenue refused to provide the Tribune with a copy of its agreement with Airbnb, saying it would have to ask permission from the company first.
But the newspaper obtained a copy from the Palm Beach County Tax Collector. It says the tax collector agrees not to communicate in any way with “any other person or entity regarding the terms of and negotiations related to this agreement, including but not limited to the press, on the Internet or another form of media, except with prior written permission of Airbnb or as is expressly permitted by law.”
The Palm Beach County Tax Collector sued the Department of Revenue to get a copy of the agreement.
“Airbnb gave a limited waiver of confidentiality to release that document, otherwise it would still be confidential,” said Tony Hamm, acting general counsel for the department.
The confidentiality clause in the agreement is meaningless in Florida, said Barbara Peterson, president of the First Amendment Foundation.
“The Department of Revenue cannot contract away its obligation under the public record law,” Peterson said.
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Palm Beach County Tax Collector Anne Gannon, who has been in litigation with Airbnb for two years over whether the company owes back taxes, is critical of these collection agreements.
“We are greatly distressed by (Airbnb) because they are saying they are going to be the collection agent, and not publish the names and addresses of people providing the service,” Gannon said. “Under the statute, we should be the agency that has the names.”
Each property owner who rents through Airbnb needs to get a business license, register with the county and pay taxes, Gannon said. If not, she said, her auditors will find them and make them comply.
“This is big business. This is a fairness issue,” Gannon said. “We have bricks and mortar hotels and bed and breakfasts pay us. Why should this business be exempt?”
The Pinellas tax collector has already seen a difference in the revenue collected but is restricted by state confidentiality law from saying exactly how much.
The county has no similar agreement with companies in the same market niche, such as TripAdvisor and HomeAway.
“It’s really disheartening because they are fighting tooth and nail over who is responsible for paying,” said Erin Sullivan-Bolt, the chief tax auditor for tourist development taxes for Pinellas County.
Pinellas Tax Collector Diane Nelson said her “biggest complaints were from mom and pops and bed-and-breakfasts that they cannot compete with Airbnb folks” as long as they were paying taxes and Airbnb hosts were not, Nelson said.
When you add the taxes, a $100 hotel room winds up costing $13, an amount that can make a big difference to economical vacationers, she said.
She met representatives from Airbnb about a year ago at a tourist development conference. They were up front about providing names of hosts and wanted amnesty for any back taxes that might be owed, she said.
But Nelson decided it was time to move forward.
“And if we do have an issue where we felt someone was not paying taxes, they would supply us with that name if we need to go to additional auditing,” Nelson said.
She said she now has a level playing field for her smaller hotel operators. And if the agreement doesn’t work out to her liking, Nelson said, she can always opt out.
Nelson was supported in her efforts by State. Sen. Jack Latvala, the Clearwater Republican who chaired the appropriations subcommittee on transportation, tourism and economic development.
“This is no different than my attitude on Uber. They need to be treated the same as taxicab companies,” Latvala said. “Just because it’s a new technology doesn’t mean they shouldn’t follow the same rules.”
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The boost in tourist tax revenue now that Airbnb is paying will certainly help, said Madeira Beach Commissioner Elaine Poe, but it isn’t going to fix the larger code enforcement problems the city of 4,300 has had with the proliferation of vacation rentals popping up in residential neighborhoods.
Madeira Beach has a rental inspection ordinance requiring property owners to get a business receipt and be inspected annually.
The city doesn’t know whether rental properties that aren’t licensed are safe, Poe said.
“That is the whole idea. We want to make sure they are legal, and if not legal, make them as legal as we can so you can rent them.”
It’s important that Tampa and Hillsborough County get the revenue they’re due, said Santiago Corrada, president and CEO of the tourism agency Visit Tampa Bay.
“If it’s being collected in other places and used for marketing destinations, we don’t want to be at a disadvantage. We want to recoup that.”
Tourist development tax revenue funds local attractions and events and helps pay for Raymond James Stadium, Amalie Arena and improvements to the Tampa Convention Center.
Capturing additional room tax revenue from the estimated 400 to 500 people who list through Airbnb could push Hillsborough County above the threshold of $600 million in annual hotel tax revenues per year that would qualify it as a “high tourist impact destination,” Corrada said.
Once it reaches that level, Hillsborough can become certified and charge an additional 1 percent per room in tourist taxes.
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The issue goes beyond tax revenues, said Lou Plasencia, chairman of the Plasencia Group, a hospitality investment advisory firm based in Tampa that does business throughout the U.S., Canada and the Caribbean.
“It’s like going into a store and paying for some of the stuff that is in your basket, and other stuff you put in your pocket and walk out,” Plasencia said.
People renting their units through Airbnb not only dodge tourist taxes used to market Tampa Bay to other communities, they also reduce the number of occupied rooms in hotels like the Hilton Garden Inn and the Marriott Downtown, Plasencia said.
“That is one less room that no longer needs to be cleaned. The housekeeper servicing that room may not be employed,” he said. “It may be that the server in a restaurant has one less server to serve and not be able to pay his or her monthly rent.”
The state, counties and municipalities must put the welfare of their citizens and visitors first, he said.
It would be easier for the state to take up the issue, as other states have done, he said. Virginia recently passed laws governing room rentals.
An effort is underway, led by the state and motel association and the American Hotel and Lodging Association, to introduce legislation to govern “these types of unregulated organizations,” Plasencia said.