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Tax Fight: Airbnb Called Out For "Sweetheart Deals"

Mary Sherman

WASHINGTON, D.C. - With the busy summer travel season just around the corner, a newer player in the lodging game is being called out in allegations of behind-the-scenes tax deals.

Airbnb, an online home-sharing service that connects hosts to short-term lodging clients, has tax agreements with 370 jurisdictions in the United States, which the American Hotel and Lodging Association contends often are created without public input, adequate oversight or auditing provisions.

Troy Flanagan, vice president for government affairs at the AHLA, described these voluntary collection agreements as shrouded in secrecy. "We're seeing one company negotiating a sweetheart deal and then only agreeing to do that if they can turn over on an anonymized basis," he said, "something that hotels and no other business that I'm aware of have the luxury of doing if they're ever audited."

According to its website, Airbnb's formal agreements with governments help alleviate the complications its hosts face in complying with the complex rules of the hotel and tourist tax system. The company was founded in 2008, and has reportedly collected and remitted more than $592 million in hotel and tourist taxes. According to data from the International Trade Administration, more than $293 billion was spent on accommodations by travelers in the United States in 2016, and hotels generated about $167 billion in federal, state and local taxes.

While arguing that home-sharing companies should pay their fair share, Flanagan also acknowledged that enforcement isn't always easy. "It's certainly no question that a host who has a short-term rental and takes money for someone to stay there should be collecting and remitting taxes," he said. "Obviously, that's difficult for a tax collector in a city or state to know when and where that's taking place." Flanagan said policymakers also should be holding Airbnb and other similar companies accountable to the same regulations that hotels must follow. "In this case taxes; in some other cases it could be access for folks with disabilities or smoke detectors," he said. "Whatever the rules, if those aren't being applied fairly, then that's putting one business at a competitive advantage because of government inaction."

Airbnb defended itself in a statement, saying claims that it's strong-arming local governments into voluntary tax deals are misleading.