By Mary Hladky
Palm Beach County residents who use Airbnb and HomeAway to rent out their homes or spare bedrooms now must provide information that will allow county Tax Collector Anne Gannon to make sure they are paying bed taxes.
The requirement is part of a Sept. 16 settlement of lawsuits the two vacation rental platforms filed after the County Commission unanimously passed an ordinance last year that tasked them with collecting and remitting to the county the 6 percent tourist development tax, or bed tax, that hotels and other short-term rentals pay.
Under terms of the settlement, vacation rental companies will not have to collect and remit the bed tax — a responsibility they have long opposed.
Instead, vacation rental hosts will have to post their business tax receipt and tourist development tax numbers on their online listings, providing proof they are paying the tax. Gannon’s office will verify the numbers.
Airbnb and HomeAway had to give hosts the ability to post the numbers on new listings in September, and by Nov. 1 for existing listings.
The companies agreed to advise hosts of the new rules. Those not complying by Nov. 1 will be delisted until they provide the numbers.
As of Nov. 7, the companies will provide to Gannon every other week a list of all rental listings and the hosts’ business tax receipt and bed tax numbers. Gannon will notify the companies if she finds any problems, and they will delist those without valid numbers until corrections are made.
Gannon won’t know how much additional bed tax revenue the county will receive as a result of the settlement until hosts who were not paying the tax start doing so.
The seven-page agreement is the first glimmer of compromise in the long-running battle between Gannon and vacation rental companies.
While the settlement resolves two lawsuits that had been consolidated in federal court, the two sides still are at odds in two pending state court cases.
Gannon has long contended that 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.
Hosts who spoke at a County Commission meeting last year said they were not trying to evade taxes. But many said they thought the vacation rental platforms handled the payments on their behalf.
Some also said that they did not understand what the county requires of them, and asked county officials to streamline procedures.
Tax collections are an issue across the state.
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 turns it over to the state. That same year, it began reaching agreements with counties on bed tax collections.
Since then, 40 of the state’s 67 counties, including Broward and Miami-Dade, have entered into agreements with Airbnb that the company will collect the bed taxes and remit them to the counties.
But Gannon has not signed on. The problem, she has said, is that the agreements do not require Airbnb to release any information about hosts or property addresses. Without that, Gannon said she can’t do an audit to see if Airbnb is paying all its hosts owe.
The agreements also don’t require the payment of previously uncollected taxes.
Vacation rentals are projected to be a $57.6 billion industry in the U.S. in 2019.
Florida hosts using Airbnb, one of the largest platforms operating in the U.S., earned $810 million in income in 2018 by providing accommodations to 4.5 million guests, the company reported.
Airbnb has about 3,700 listings in Palm Beach County, while HomeAway, which also operates VRBO and VacationRentals, has about 2,000.
While the legal battle has not ended in Palm Beach County, both Airbnb and Gannon were pleased with the settlement.
“We welcome today’s settlement as a step in the right direction towards a better, long-term relationship with Palm Beach County, something Airbnb has proactively sought for years,” Airbnb said in a September statement.
“We are satisfied with it,” Gannon said of the settlement on Oct. 7.
Gannon said she could not discuss the state court cases because they are pending, but she did express her displeasure with the vacation rental platforms.
“They filed these lawsuits after they agreed to sit down and talk to us. Two days later we had notice they filed,” she said.
In a 2014 lawsuit, Gannon alleged that Airbnb, HomeAway, TripAdvisor and CouchSurfing International failed to register as rental dealers and did not pay the bed tax.
On Jan. 23, Circuit Judge James Nutt ruled against Gannon, saying it is up to hosts, and not the vacation rental platforms, to collect and remit the bed tax.
Even so, he said Gannon’s goal is “laudable” and it would be most efficient if the platforms collected and remitted the tax.
Gannon has appealed the ruling to the 4th District Court of Appeal.
The county ordinance passed in 2018 added to rules already in place but shifted the burden to the platforms to make sure the bed tax is paid.
Shortly thereafter, Airbnb and HomeAway filed the now-settled suits in federal court.
The county amended the ordinance in June to eliminate provisions that required the platforms to submit monthly reports that included names of hosts, addresses of vacation rentals and bed tax account numbers, and to remove “illegal listings.”
It added a provision that the platforms collect the bed tax and transmit it to hosts, with the hosts sending the tax money to the tax collector.
Airbnb sued Gannon again in August, saying the county was doing an “end run around Judge Nutt’s ruling” and was improperly making vacation rental platforms the “de facto enforcement arms of the tax collector.” The company seeks a ruling that the portions of the amended ordinance are invalid.
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