UConn Law Professor Richard Pomp -- a renowned state and local tax law expert -- released a new report on Airbnb's voluntary tax agreements with hundreds of municipalities nationwide.
Along with analyzing the unprecedented and vital nature of Airbnb's tax agreements -- which have generated more than $1 billion in tax revenue across the U.S. -- the report also addresses and refutes the many "myths" that the hotel lobby has created regarding Airbnb's tax agreements. The hotel lobby has lodged this erroneous attacks in an effort to dissuade municipalities from entering into these tax agreements and preventing Airbnb from collecting and remitting taxes.
This is particularly relevant in Tennessee, where Airbnb collects and remits all state and local sales taxes through a 2018 tax agreement with the Tennessee Department of Revenue. The company recently announced that it delivered $23.5 million in tax revenue to the state in the first year of the agreement, nearly doubling initial expectations. Airbnb also now has agreements in place with Knoxville, Memphis and Hamilton County to collect their respective local occupancy taxes.
You can find the full report here.
Toplines on Pomp Report
Professor Pomp's report makes several conclusions regarding the validity and unique nature of Airbnb's voluntary tax agreement:
• As a platform, Airbnb typically does not owe local municipal taxes in the same way that a hotel would. Instead, the hosts and travelers are the responsible parties -- which creates an unintentional administrative burden for taxpayers and local tax authorities.
• Municipal tax departments have to ensure compliance for large numbers of hosts and guests, while Airbnb hosts are unaware of their new tax obligations, or struggle to decipher tax code.
• To ease this, Airbnb has voluntarily entered into hundreds of agreements under which it collects the municipal and state taxes that hosts or guests owe, bearing all the administrative and collection costs under these agreements.
• Voluntary tax agreements on this scale are unprecedented.
The report then goes on to discuss the ways in which the hotel industry has attempted to malign this unprecedented approach, refuting their arguments point by point while explaining the danger that their efforts to politicize this issue pose to municipalities.
• As an example, the report calls out the hotel lobby's recent efforts to use the Supreme Court's Wayfair decision -- and the corresponding "platform legislation" that many states have passed in response -- to argue that Airbnb's tax agreements are now constitutionally irrelevant and should be eliminated. The report explains that there is a gap in coverage between platform legislation and our agreements, and that our agreements remain vital and critical.
The report concludes that, contrary to what the hotel lobby would have the public believe, it's not Airbnb that doesn't want to pay taxes -- it's the hotel lobby that doesn't want Airbnb to pay taxes.
