By Mary Hladky
Palm Beach County Tax Collector Anne Gannon has prevailed in her long battle to ensure vacation rental hosts pay the 6 percent tourist development tax to the county.
The Palm Beach County Commission on Oct. 16 unanimously passed an ordinance that requires vacation rental platforms to collect and remit to the county the so-called bed tax that hotels and other short-term rentals are required to pay.
“We need more tools in our toolbox to enforce our bed tax,” Gannon told commissioners.
Vacation rentals are a $36 billion industry in the U.S. and growing rapidly. Airbnb, one of the best-known companies, had 2,300 hosts in Palm Beach County last year.
Gannon has long contended the county is not getting all the bed tax revenue it is owed because vacation rental hosts either do not know they are supposed to pay or simply don’t want to.
The ordinance adds to rules already in place that require hosts to pay the bed tax. But now, vacation rental platforms will have to take on the burden of making sure that happens.
The platforms must verify that vacation rentals are registered with the Tax Collector’s Office and have a business tax receipt and a tourist development tax account before they can list the rentals on their platforms.
They also will have to file monthly reports with the tax collector that include the names of all hosts, each vacation rental’s location, and number of nights rented and amount paid for each stay.
Any platform or booking service that violates the rules faces civil penalties of up to $500 per unit per day.
Although the ordinance applies to all hosting platforms and booking services, much of the focus has been on Airbnb because of its strong resistance.
“We don’t need this shakedown-style ordinance,” Airbnb’s Florida policy director Tom Martinelli told commissioners on Sept. 18.
“This Tax Collector’s Office has been particularly hostile to this industry in her public commentary,” he added.
Martinelli asked commissioners at that meeting to reject the ordinance or postpone voting on it until after the resolution of a 2014 lawsuit Gannon filed that alleged Airbnb, HomeAway, TripAdvisor and CouchSurfing International have not paid the bed taxes.
Any resolution doesn’t look likely to happen soon. Both sides will argue motions for summary judgment on Nov. 27 before Circuit Judge James Nutt. Gannon, who has vowed not to settle the case, has said it will go to trial.
Martinelli wants Gannon to enter into an agreement with Airbnb under which the company will collect the bed taxes and remit them to the county. Airbnb has reached such agreements with 39 Florida counties, including earlier this year with Miami-Dade and Broward counties. Both counties at the time said they would seek similar deals with other home-sharing platforms.
Airbnb reached an agreement with the state Department of Revenue in 2015 in which the company collects state sales tax from its Florida hosts and pays the state. The same year, it began reaching agreements with counties on the bed tax collections.
But Gannon won’t sign on. The problem, she has said, is that the agreements don’t require Airbnb to release any information about hosts or property addresses and don’t require payment of previous uncollected taxes.
Without host and property location information, Gannon said she can’t do an audit to see if Airbnb is paying all it owes.
“They give us a take-it-or- leave-it agreement,” Orfelia Mayor, Gannon’s general counsel, said at the September commission meeting. “It is take our word for it. This is what we owe you.”
Mayor raised another complaint at the October meeting, saying Airbnb has staged “a huge campaign of misinformation,” wrongly telling hosts that the ordinance would impose a new tax.
Vacation rental hosts attending the meeting said they were not trying to evade taxes.
Maria Vale was one of several hosts who thought Airbnb collected the bed tax.
“We thought Airbnb took care of everything,” she said.
Many said they did not understand what the county requires of them. Some had scoured the internet for information but could not find where the rules were spelled out.
One problem, it turned out, was that the information is not included on the county’s website. Instead, hosts need to look at the tax collector’s site, pbctax.com.
Speakers generally said they were in favor of the ordinance. But some said the county’s system is confusing and cumbersome, and asked for it to be simplified.
Mayor said that is, in part, what the ordinance will do by requiring platforms to tell hosts what the requirements are.
“It puts it all in one streamlined ordinance … so anyone knows how to stay in compliance,” she said.
But she agreed that the information should be included on the county’s website and that the tax collector’s site should be made “more robust.”
No officials from vacation rental platforms spoke at the meeting. But afterward, Airbnb released a statement saying the ordinance violates federal and state law by divulging private information about hosts. Mayor has disputed that and said Airbnb has not prevailed on that claim in any legal case.
“We will consider all options to protect the privacy and property rights of our Floridian hosts,” the statement said.