Home-sharing service Airbnb will collect Colorado state sales tax online starting Wednesday, simplifying a structure that temporarily turned hosts into the taxman.
But Denver hosts can keep tax collector on their resumes until the end of June, when the city hopes to have new rules in place allowing third-party vendors to collect its 10.75 percent lodger’s tax.
Tax experts and Airbnb hosts call the change a step in the right direction, adding a line item that guests already see on ordinary hotel bills. Prior to the change, hosts were expected to collect and remit the state’s 2.9 percent sales tax themselves.
“We hear from (our hosts) all the time that they want to be able to pay their fair share in hotel taxes,” Airbnb spokesman Christopher Nulty said. “This creates a really streamlined process for our hosts.”
Denver treasurer Steve Ellington said the city is working to update its regulations to allow vendors such as Airbnb to collect local taxes. Home-sharing visitors to Boulder, Colorado Springs, Golden, Steamboat Springs and Snowmass Village already can pay local lodging taxes as they book their rooms online.
“I’m glad that Airbnb is collecting the state (tax),” Denver Airbnb host Loren Speer said. “Having us be tax collectors is a pain.”
Speer has been a host since September 2014, but it hasn’t been until recently that municipalities began regulating the relatively new home-sharing industry. In Denver, hosts have been required to remit taxes since Jan. 1.
“I believe that we should collect the tax,” Speer said. “But the process was just ridiculous.”
Speer said he had to obtain a state tax-collection license as well as the short-term rental license that Denver requires. He has to explain the tax to guests, who are usually understanding. But because, until now, Airbnb hasn’t collected the tax on its website, Speer has had guests pay him in a separate transaction using the online platform Venmo.
Speer said he wishes the state and Denver had firmed up agreements with Airbnb before requiring hosts to start to collect taxes. There are about 22,000 short-term rentals listed on Airbnb in Colorado. The company remits taxes to about 250 governments worldwide.
Although Speer is among the hosts who is complying with the new tax rules, he said others aren’t. He described two groups: hosts who won’t pay the lodger’s taxes, relying on a lack of enforcement and the confidentiality of Airbnb to get away with it, and people who are closing their homes until Denver and Airbnb figure it out.
Avalara MyLodgeTax general manager Rob Stephens said taxes and regulations will be the next evolution of the shared economy for Airbnb and similar services, such as HomeAway and VRBO. Avalara MyLodgeTax helps people make their short-term rental or vacation property tax compliant.
Airbnb is the only service proactively collecting and remitting taxes, he said. Most other websites rely on educating their hosts or referring them to services such as his.
“Local sales and lodging taxes, it’s just not something (hosts are) familiar with,” Stephens said. “This is confusing and complicated.”
Ulrik Binzer, founder of Host Compliance, which works with municipalities to enforce regulations for short-term rentals, said Airbnb’s move was a positive step to ensuring that cities get their tax dollars.
Resort communities could stand to see hundreds of thousands of dollars a year if Airbnb collects the tax instead of relying on hosts, he said. Denver, where Airbnb has been rapidly growing, is also positioned to see a lot of money.
“Smart cities are thinking about how to manage the industry before it gets completely out of control,” he said.
But Airbnb is only one platform out of about 125 vacation rental websites out there, he said.
“While it’s obviously a welcomed step and Airbnb has a large market share, it isn’t anything like be-all and end-all,” Binzer said.
