MT lodging industry says Airbnb rentals may be shirking tax payments

Posted at 9:33 PM, May 03, 2018
and last updated 2018-07-05 15:06:54-04

HELENA – A study commissioned by Montana’s lodging industry says rentals by Airbnb, the on-line lodging giant, generated $69 million of revenue last year in Montana, but likely didn’t pay state lodging taxes on that amount.

Industry spokesmen this week that the Montana Legislature should pass a law to clarify taxation of Airbnb and other online lodging services, and to ensure that full taxes are being collected.

“It’s enough money that it matters to our state economy,” Stuart Doggett, executive director of the Montana Lodging and Hospitality Association, told MTN News on Wednesday. “We just think there’s some money that’s not being collected, that would benefit our government.”

A spokeswoman for Airbnb, however, said the more accurate number for Montana earnings by Airbnb “hosts” in 2017 is $20 million – and that the company is not trying to shirk its tax responsibility.

Airbnb has arranged tax “partnerships” with states and local governments across the country, to ensure proper taxes are paid on Airbnb rentals, and is willing to arrange one with Montana, the company said in a statement.

The Montana Department of Revenue said anyone renting their property through Airbnb or another “third-party platform” is responsible for paying the state’s total 7 percent tax on lodging: A 3 percent lodging sales tax and a 4 percent “accommodations use tax.”

Revenue from the first tax goes into the state treasury, while revenue from the second one is used to promote tourism in Montana.

However, the Revenue Department said it’s not able to track whether Airbnb proprietors are paying the tax. The department also declined to say whether it’s discussing any agreement with Airbnb.

Airbnb confirmed that it does not have a voluntary tax agreement with the state of Montana.

Doggett said the lodging industry in Montana is generally opposed to such agreements, because they’re not “transparent.”

“The public hasn’t had an opportunity to provide input, there’s not been hearings or awareness,” he said. “They’re kind of a secret deal, and we just think transparency would be good for all parties involved.”

Airbnb disputed this point as well, noting that its tax agreements with other states and local government are often found posted online.

Airbnb is an online service that property owners can use to rent out rooms, apartments, houses or even motel rooms. Airbnb collects the money through its website and charges property owners a fee for its service.

The study conducted for the Montana Lodging and Hospitality Association said Airbnb rentals have seen dramatic growth in the state in the past two years, from around 500 “average daily units” in late 2015 to as high as 3,000 daily units in mid-summer last year.

Doggett said the study culled data from Montana rentals listed on Airbnb’s website, and concluded that the rentals generated $69 million of revenue last year – most of that from homes and apartments.

Airbnb disputed the study, saying it relied on data from host calendars, which may list the rental as “occupied” when the host isn’t actually renting out the unit.

Doggett said the lodging industry doesn’t believe Airbnb or its hosts are paying the full taxes due on their rented units. He also said they may not be paying local resort taxes, which are an extra sales tax collected by certain Montana towns with tourist economies.

Montana’s lodging taxes generated $54 million last year — $31 million for tourism promotion and $23 million for the state treasury.

The Revenue Department said companies like Airbnb that charge fees to property owners to advertise units for rent must collect Montana’s 3 percent lodging sales tax on the fee they charge.

However, the department said it believes state law would need to be changed to require Airbnb to pay the 4 percent accommodations use tax.