Renting out a spare room or apartment for a few days? Sounds like easy money. But when one Airbnb host in the Mission District complied with San Francisco’s new requirement to register with the city, she received an unpleasant surprise – a bill for hotel taxes. “Now that we complied, we are wondering if we should not have,” she said ruefully.
In a sense the bills being sent to hosts are a salvo in the larger ongoing battle in San Francisco – and across the world – over how to regulate the billion-dollar sharing economy. Cities assert that hosting platforms like Airbnb are like any brick-and-mortar business. The platforms say they are different.
The dispute is playing out in those tax bills in San Francisco.
Airbnb collects the hotel tax directly on its platform from hosts such as the woman in the Mission, and writes the city a monthly check. The city, however, says that’s not enough.
“When you file your taxes, you can’t just send a check, you are required to give information about your income. Every business in San Francisco has to do the same thing,” said Amanda Kahn Fried, a policy and legislative manger with the Office of the Treasurer and Tax Collector.
The city, she said, has no way to check that anyone’s specific taxes have been paid. As a result, “there is joint liability” until the city can connect the dots between a tax payment and an address.
It’s unclear to what extent the city will pursue hosts, but the tactic puts hosts and platforms at odds and may give the city more leverage to regulate Airbnb. Already, the tax bills to hosts – followed by incensed Airbnb blog posts – have sent the City’s Tax Collector and Airbnb back to the negotiating table to address what an Airbnb spokesman called “the challenging issue” of the hotel tax.
It’s a challenge peculiar to Airbnb. When most businesses pay the hotel tax, they submit information on an address, unit and the number of nights a room has been rented.
Airbnb submits “anonymized” information. As an Airbnb spokesperson explained, that’s “basically a long list of the transactions that happen in San Francisco.”
Does this include addresses, units and number of nights?
“No,” the spokesperson said. The reason, he explained, is that Airbnb is different. Although it pays the hotel tax, it is not a hotel because its hosts cannot rent out their places at will, but are constrained by the city.
But so too are others that pay city taxes, such as SROs and the owners of buildings built before 1979. And they, too, must submit detailed tax information. How far the “we are different” argument may take Airbnb remains to be seen, but it may eventually end up in court. A labor commission failed to buy the “we are different” argument in the case of Uber, and ruled earlier this month that its drivers are employees and not independent contractors. (Uber said Wednesday it is is appealing the decision.)
It’s an argument that Airbnb is also using to battle the Board of Supervisors’ efforts – delayed until July 14 – to effectively regulate short-term rentals.
At present, the city caps un-hosted rentals at 90 days a year. It also requires hosts to register with the city – something fewer than 600 of the more than 6000 hosts have done.
The reason effective caps are so important is that, it’s widely agreed, landlords need to be discouraged from taking long term rentals off the market. One unit taken off the market quickly negates all of the positive economic benefits of homesharing, such as local spending, local earning and the fat tax check the city gets, according to city reports.
To insure compliance, Supervisor David Campos wants hosting platforms to require a city registry number before listing their room, unit or house. Once the host reaches the cap, Campos proposes, the listing should be dropped until the next year. Airbnb is balking.
I suggested to Airbnb’s spokesman that Campos’s suggestion was akin to other public/private arrangements. Banks, for example, require that a business register with the state before it can open a bank account.
Airbnb operates around the world, the spokesperson said. “It would be nearly impossible for us to self-police and take on the role of the government and enforcement agency.”
When it was pointed out that many banks also operate globally, the spokesman offered a different analogy. If he is driving on Highway 101 and is speeding, he said, we don’t ask ATT to provide the highway patrol with that information. Moreover, we let the car companies make cars that exceed the speed limits, he added.
In other words, “we are different.”