Airbnb agrees to collect and pay 14% hotel tax in LA
Los Angeles city officials announced yesterday that Airbnb will collect taxes from its guests in Los Angeles from August 1, making the city the latest of more than 190 around the world where the company collects taxes directly from its users. The platform will collect and pay 14% tax on the roughly 12,270 active listings in the city, anticipated to earn about $5m annually. It is worth noting that the deal does not yet make the listings legal, and is only a three-year interim solution, after which it can be adjusted or eliminated depending on the City’s findings. According to City Administrative Officer, the payments will at least ensure the city does not lose revenue while debates continue on the best way to regulate the service.

It’s been a struggle for Los Angeles officials to make sure Airbnb hosts and other short-term rental hosts are paying the same taxes that hotels pay. But a new deal between Airbnb and the city will make that a lot easier. In a move expected to generate millions of dollars for the city, Airbnb has agreed to collect lodging taxes from its hosts directly and pass them on to the city, the Los Angeles Times reports.

"Our community of hosts want to pay their fair share and we want to help," Airbnb's Public Policy Manager for SoCal said in a statement. "These agreements allow cities to rightfully benefit in the economic impact of home sharing while also making it easier for Airbnb hosts."

The deal, announced Monday, is likely to impact thousands of hosts citywide who will have to start paying the 14 percent tax. Airbnb estimated there were about 12,270 active hosts in Los Angeles last year, and the city anticipates collecting $5 million in taxes. That's a lot less than a previous estimate from Airbnb, which ballparked the figure last year at $20 million.

So it can audit the tax payments, the city will assign each host an anonymous number

The deal does not, according to the Times, prevent the city from going after hosts who failed to pay taxes prior to the agreement.



It also does not make these rentals legal now, says City Administrative Officer Miguel Santana. That’s a whole other matter entirely. The agreement is set to expire in three years, and can be adjusted or eliminated based on whatever new regulations the City Council puts in place.



"There is going to be a lot of debate about how this industry is regulated," Santana says. "We just want to make sure that while that conversation is taking place, the city is not missing out on millions of dollars in revenues."