Airbnb Says It Will Start Collecting Hotel Taxes In San Francisco

Airbnb said it will start collecting San Francisco’s 14 percent hotel tax on behalf of hosts today. The move counters critics who’ve claimed that the company has willfully dodged taxes to get ahead of traditional competitors in the hotel industry.

But as Airbnb has grown up and is now poised to command a possible $10 billion valuation from private investors, they’ve said they want to play by city rules.

David Hantman, Airbnb’s Head of Global Public Policy, wrote today:

“We have repeatedly said that we believe our community in San Francisco should pay its fair share of taxes. We know from countless discussions with our hosts that they want to pay taxes, but some of these rules are arcane and difficult to follow. Some hosts have even tried to pay taxes in San Francisco and been turned away.”

The move follows the company’s announcement last week that it had reached a partnership with the city of Portland to pay transient lodging taxes, work with the city’s tourism bureau and offer guests the chance to donate to local causes. The company is hoping that the new initiative, called “Shared Cities,” will get adopted by local governments internationally. Airbnb also said last week that if it were paying hotel taxes in New York, it would be generating about $21 million per year for the city.

San Francisco charges a 14 percent hotel occupancy tax, which may generate $274 million in revenue for the city this year. The taxes would get tacked onto a guest’s bill as an extra charge on top of the nightly rate and Airbnb’s fee.

Before, Airbnb would send out tax forms like 1099s and W-9s for hosts to report their earnings. This, of course, is a lot of extra paperwork and it’s likely that many Airbnb hosts just probably didn’t bother with reporting their earnings from hosting. Update: Airbnb says this hotel tax collection comes on top of taxes on earned income. So yes, hosts still have to do their 1099s.

San Francisco city supervisor David Chiu has been crafting new regulation for short-term stays on platforms like Airbnb for almost two years. The issue is that city regulations have proven politically difficult to update, especially given the tense climate around housing affordability in the city, zoning restrictions and concerns from neighbors. Chiu’s legislation isn’t expected to override lease agreements, meaning that tenants still have to abide by the rules their landlords have established.