Airbnb is settling its $120 million lawsuit against the city of San Francisco for $0, bringing an end to a contentious tax dispute that has drawn criticism from the city’s labor unions and elected officials.
The lawsuit, filed on Feb. 23, 2024, sought to recover roughly $120 million in allegedly overpaid business taxes that the company claimed were incorrectly calculated by the city for the tax years from 2019 to 2022.
“We are pleased to have reached an agreement that, above all, protects the public’s money,” City Attorney David Chiu said in a statement. “Our office works tirelessly to defend San Francisco’s tax laws and ensure all taxpayers pay their fair share. This settlement achieves both goals while putting this dispute behind us.”
The settlement may help the city’s large deficit. The $120 million that Airbnb claimed to have overpaid in taxes was being held by the city’s litigation reserve, which keeps money that the city may have to pay out for lawsuits.
More information about the financial implications of the settlement will be shared by the city in March during a five-year financial forecast from the controller’s office, the mayor’s office and the Board of Supervisors’ Budget and Legislative Analyst.
Whatever money is released after the settlement will be spent down over three years to avoid creating a fiscal cliff, according to the Mayor’s office.
The $120 million sum was an unusually large amount for a tax dispute lawsuit. Other settlements that the city has made recently include $2.2 million to the Pacific Bell Telephone company, and $1.6 million to Coinbase.
In 2025, San Francisco labor unions called for a boycott of Airbnb over the lawsuit. They staged rallies last October outside of the short-term rental company’s headquarters in SoMa to pressure the company to drop the lawsuit.
Elected officials, including District 1 Supervisor Connie Chan and District 6 Supervisor Matt Dorsey, whose district includes the Airbnb headquarters, joined the boycott rally.
“This settlement means that our boycott was justified, and we are very glad to see Airbnb finally paying their fair share,” said Kim Tavaglione, the executive director of the San Francisco Labor Council.
“Airbnb’s greedy tax avoidance has been costing the city, but now this money is freed up to support essential services for San Franciscans,” Tavaglione said.
Airbnb alleged that the tax error was due to the city misclassifying the company as a travel arrangement and reservation services firm, rather than an online platform.
“The City and Airbnb have reached a tentative agreement, subject to city-level approval, to dismiss its tax refund lawsuit,” read a statement from Airbnb. “We are pleased to reach an agreement and we’re committed to ensuring San Francisco remains a great place to live and work.”
Thanks for the link! It’s a resolution pending at the Board of Supervisors, to sign off on the settlement.
The question in my head on reading this story was: why is Airbnb settling? What do they get from the settlement, if the city isn’t paying anything?
Following the link gives one possible answer: it says neither Airbnb nor the city will owe the other anything with respect to these taxes for 2023 or 2024, either. That means no refunds for those years, just like the earlier years — but also no trying to collect if they underpaid.
Did Airbnb underpay in those years? Maybe after filing this lawsuit, they started paying less based on what they were claiming they really owe. If so, then this is a big concession the city attorney is making, giving Airbnb two years of their preferred lower rate in exchange for four years of the higher rate.
But isn’t such a compromise in the very nature of settlements of lawsuits like this?
Meaning that neither side gets everything that they want?
Airbnb fails to take care of damages caused be guest that they supposedly verify. Airbnb cuts corners where ever they can. Airbnb should only pay taxes as a website though and not a vacation rental. Airbnb also charges the guest taxes on the booking so don’t these go to the city, state and federal government? If so then these are the vacation rental taxes the city should receive and after that Airbnb is just a website.
The city of San Francisco’s tenants rights laws prevent a landlord from making any money. This prevents investors from wanting to buy in San Francisco or use the buildings for housing instead of Airbnb. So much of San Francisco realestate is dilapidated because property owners cannot afford to do the work to update them. If the city wants to keep the rental market so far below market then they should use that money from the settlement for subsidy programs for landlords. Programs for landlords to update their buildings with below market rents due to San Francisco rent control laws.
The fact that SF ever rolled out the red carpet for big tech companies through tax breaks in the first place was/is a huge mistake. Most of these companies feel 0 responsibility to the communities they inhabit and scoff when told about fairness.