Industry disrupters could be shortchanging county tourism tax dollars

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By: Mariel Carbone | WCTV Eyewitness News
April 26, 2018

TALLAHASSEE, Fla. (WCTV) – As visitors come to the Capital City, many are taking the nontraditional route and staying in individual homes instead of big-name hotels. That action is potentially shortchanging the county.

Under state and local law, all short-term rentals, from hotels to home sharing hosts, are required to pay the county’s five percent tourist development tax, also known as the bed tax. That tax helps support tourism initiatives like marketing, as well as tourism infrastructure like the Cascades Amphitheater and Apalachee Regional Park.

However, disrupters like Airbnb and VRBO make enforcement of that tax difficult.

“We can go out and say, well we see that you’re advertising your home for lease. And we could contact that individual and they say, oh no, we didn’t do anything. And that’s about the extent of it,” said Leon County Tax Collector Doris Maloy.

Maloy said that all short term rentals are required to register with the county and that the individual host is responsible for collecting the tax for each stay.

However, hosts have said it can be confusing.

"Actually, it’s been very confusing,” said Dedra Mitchell, who lists her home in Midtown on two separate websites. "It’s almost like you’re renting out your home and now you have a mini business. When you get involved with this and you enter into this with the taxes, you’re running a business."

Mitchell has filed with the county and does pay taxes for her rentals, but admits that not all home sharing hosts do.

"I think people just decided, since there's not a clear understanding. They just opt out at this time,” she said.

Last year, the county collected about $5.8 million dollars from the tourism development tax. A majority of that money came from hotels, which brought in roughly $4 million. Motels brought in about another $900,000.

For the hotel industry, they’d like to see a fair playing field.

“We believe if you are operating in a manner that you look like a hotel, you act like a hotel, you perform like a hotel, then you have a similar obligation to collect the taxes and submit them to government,” said Samantha Padgett, General Counsel for the Florida Restaurant and Lodging Association. “We’re looking at a level playing field for everyone operating in that commercial space.”

Currently ,115 entities are registered with the county to pay the tourist development tax. 56 of those are hotels or motels. The remaining 59 accounts include apartments, townhomes, single family homes and more. However, in doing a quick search on home sharing websites, it’s easy to see that there are more than 59 homes and apartments advertised.

Currently, there are four major players in Leon County, including Gameday Housing and Rent Like a Champion. The biggest two are Airbnb and Expedia’s Homeaway or VRBO. As of Thursday, Airbnb had more than 300 listings for this weekend. VRBO had around 90.

"There's confusion about what taxes apply, am I responsible, how often am I supposed to do it?” said Ben Breit, a spokesperson with Airbnb representing Florida.

Breit said Airbnb is working to make the process easier. The company has made agreements with 40 counties in the state of Florida to collect and remit the bed tax for its hosts. Among those counties are Franklin, Gadsden, Taylor, Wakulla and Leon.

The agreement with Leon County was made last June and took effect July 1. That agreement brought in $58,000 for Leon County for 2017. Airbnb is the only home sharing company to collect taxes on behalf of its hosts in the county.

"It just ensures there are no discrepancies, there's no confusion. Everyone is paying the same taxes,” said Breit.

Under the agreement, Airbnb is filed under one entity with the Tax Collector’s Office and is lumped into the hotel category. Therefore, all of its hosts do not need to register. However, if the hosts advertise with any other home sharing companies, they are required to register and collect taxes made off of those transactions.

Expedia’s Homeaway and VRBO only have one tax agreement in the state of Florida, which is with Broward County. In a March newspaper article, Broward County Administrator Alan Cohen told the Tampa Bay Times, "We were persistent enough that they responded… The deal we made with them is virtually identical to the AirBnb nomenclature."

We reached out to the company for comment, but did not hear back. However, according to its website, the responsibility falls on the host. A statement reads, “It is important that owners understand their tax obligations and follow their state and local laws and regulations. Lodging Tax is typically paid by the traveler, but the obligation to remit the taxes to the government usually falls on the owner.”

Likewise, Rent Like a Champion also keeps the responsibility on its hosts.

Mike Doyle, CEO of the company, said, "Similar to other vacation rental platforms, we encourage our hosts to maintain compliance with any local ordinances and/or taxes. We work hard to make sure that each of our hosts is aware of local regulations, and has all the information necessary to remain compliant."

Assistant County Administrator Ken Morris said it’s the county’s expectation that everyone complies with the law, but said that he doesn’t believe anyone would say that the county has a 100 percent perfection rate on collecting.

“It’s constantly difficult to keep up with the changing market conditions. The online platforms, you don’t have your traditional bricks and mortar host,” said Morris. “This isn’t an issue specific to Leon County or even the state of Florida. This is a national trend we’re seeing and it always demands the need to keep the laws up to date with technology.”

He believes the right move is to create a regulatory framework that would compel these platforms to comply with the law.

Right now, the Tax Collector’s Office does have the power to audit if they believe people are not paying the tax. However, Maloy said this typically only happens if there are red flags. To be able to scour the internet and investigate all listings would cost money she doesn’t believe would have an equal return.

“I do think that we are missing out [on money],” said Maloy. “Would it be enough to say, let’s create a unit to go out and enforce? I don’t think so.”

For hosts like Mitchell though, she’d just like to see some consistency.

“I think it needs to start being consistent so it can be fair among all the hosts and different platforms,” she said.

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