Airbnb Closes Tax Deal With Michigan, Now Collects in 30 States

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Alex Ebert

Airbnb Inc. has reached a deal with Michigan to remit use taxes starting July 1.

The deal is anticipated to bring in more than $1 million in revenue and simplify the process for hosts using the site to rent out their homes and apartments. The deal, announced June 8, also means the state will more easily be able to track and collect the 6 percent use tax that applies to nightly rental charges on stays in Michigan hotels for periods of less than a month.

“Home sharing is introducing a whole new world of travelers to the authenticity of Michigan while offering new economic opportunities for thousands of local residents,” Will Burns, Michigan policy director for Airbnb, said in a statement. “We are so proud to have collaborated on this agreement which will unlock a brand new tax revenue stream for the State of Michigan.”

Michigan Treasury spokesperson Ron Leix said the Treasury Department is unable to comment because state law prohibits it from providing information regarding administration of a tax. However, according to figures released by the company, Michigan rentals generated $25.2 million through Airbnb in 2016. If these figures carried into 2017, the state could collect $1.5 million in taxes through the first year of the deal.

In the last year alone, more than 80,000 night stays were booked in Michigan Airbnb homes, according to data compiled by analytics company Airdna. The service has boomed in Michigan, with listing for renting a host’s entire house quadrupling since 2015.

National Tax Patchwork

Occupancy taxes have been a large regulatory sticking point for proponents and detractors of Airbnb since the group was founded in 2008. The company has even had litigation with its home city of San Francisco over regulations of short-term rentals, which the city has monitored in attempts to decrease skyrocketing housing prices.

Airbnb now collects and remits taxes in 250 “jurisdictions” across the United States, according to its website. That includes 24 states and more than 200 counties and municipalities.

At last year’s U.S. Conference of Mayor’s annual meeting, Chris Lehane, Airbnb’s head of global policy and communications said, “Read my lips. We want to pay more taxes.”

Under the agreement with state treasuries, Airbnb automatically collects and remit taxes on all bookings within a state. Previously, the collection of taxes in Michigan was left to the option of hosts.

However, tax collection on Airbnb properties is still a gray area in many parts of the country when it comes to local occupancy taxes. The company leaves the legal determination of whether to collect a local tax up to its users, and won’t collect those taxes itself absent an agreement with local taxing authorities.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

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