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"As far as the state of New York is concerned, most of\u00A0Airbnb's\u00A0business is\u00A0illegal.\nWhat had been a relatively civil legal proceeding spilled into the press this week when the rental startup and New York Attorney General Eric Schneiderman met in court on Tuesday.\u00A0Airbnb has said the attorney general \u201Cis determined to fight innovation and attack regular people.\u201D The attorney general's office claims it has worked with numerous other tech companies to stamp out illegal activity, but that Airbnb is being evasive.\nSee also: I Bought an Apartment Just to Rent Out on Airbnb\nAt the center of the dispute are\u00A0records of Airbnb\u2019s hosts who rented their homes in New York. The attorney general wants the information. Airbnb, worried about the impact this could have on its customers and its business, has resisted.\nThat may seem like a local issue, but the ramifications are big. The case could become a guide for other municipalities that want to limit rentals through Airbnb.\nBeyond Airbnb, the case is among the most high profile of any company in the sharing economy, the peer-to-peer marketplaces that some believe could change how we do business everywhere.\nLet's start simple.\nGive me a quick refresher on Airbnb.\nAirbnb is an online platform that allows you to list your house or apartment as a rental. Going away for the weekend? Got a spare bedroom for the next few weeks? You can put it on the site, find a person to rent it and pocket some extra cash.\nLess than six years old, the company is already valued at around $10 billion.\nSeems like a good idea. What\u2019s the problem?\nHousing laws in some places prohibit the rental of rooms, apartments or houses under certain conditions.\nThe business of Airbnb is not illegal, but the rentals can be. New York real estate law prohibits certain housing arrangements. Among the most important to this case: owners or renters of New York apartments cannot rent them out to someone else for less than 30 days unless they are also present. So if you went away for the weekend and rented your apartment out through Airbnb, that would technically be illegal.\n\nNew York Attorney General Eric Schneiderman speaks at a press conference.Image: Richard Drew/Associated PressIsn\u2019t that a lot of Airbnb\u2019s business?\nThe New York attorney general certainly thinks so. About two-thirds of Airbnb\u2019s New York City rentals are of this type, according to an analysis commissioned by the state of New York.\nAirbnb disputes this, sort of. Airbnb\u2019s head of global public policy wrote in a blog post that \u201C87% of Airbnb hosts occasionally rent out only the property in which they actually live.\u201D Not exactly a denial that most of its New York hosts break the law, but a strong claim that shadier arrangements like \u201Cillegal hotels\u201D are rare. Airbnb said it recently cracked down on hosts with numerous listings that \"weren\u2019t providing a quality, local experience to guests.\"\nAnd the state of New York has a problem with that?\nOh yeah. Schneiderman has been working on going after the company for months.\nLast fall, his office sent Airbnb a legal notice requesting information on about 15,000 hosts who had listings on the site, in an effort to crack down on tax evasion and \u201Cillegal hotels.\u201D\nAn individual tenant who leases out an apartment for a weekend might be breaking the law but is probably not the focus of the state\u2019s action. Instead, the state is targeting hosts who have dozens of listings or use Airbnb for illicit activities.\nAirbnb is not thought to be evading any taxes, but its customers might be. The rental of homes or apartments is subject to local taxes, some of which the attorney general believes are not being paid.\nAirbnb\u2019s terms of service put the legal responsibility for paying taxes on its hosts. The company has also worked with other cities, namely Portland and San Francisco, to include city taxes in its arrangements.\nIf laws were put in place to prevent these kinds of rentals, then what\u2019s the point? Does Airbnb offer any positive impact?\nAirbnb certainly thinks so. The company claims that it makes New York rent more affordable for hosts and projects that it will generate $768 million in economic activity in New York in 2014 as well as $36 million in sales tax.\nThis thing is worth $10 billion?\nYup, that little apartment rental business has blossomed into a serious moneymaker. A recent round of fundraising valued the company at $10 billion.\nSo is this a case of a few bad apples spoiling the bunch?\nPerhaps. Airbnb has been subject to some high-profile disasters such as the \u201CXXX Freak Fest\u201D and the trashing of an apartment, but the company claims these are aberrations among its 500,000 hosts across the world.\n\nAn image of the tweet that advertised a gathering, which used an Airbnb listing.Image:  Air TemanThere is some talk that New York\u2019s real estate laws could change. Speaking to PandoDaily on Thursday at New York Tech Day, Schneiderman said that he is required to enforce the current law, which he notes was passed in 2010 \u201Cwhen Airbnb was in business, with them in mind.\u201D\nI might have rented out my apartment one weekend when I was away. Am I going to be in trouble?\nMaybe. If Schneiderman gets the courts to force Airbnb to relinquish its host data, he could begin targeting hosts who broke the law. It probably wouldn't make much sense for him to go after people who use the site occasionally, but it might be a good idea to find out if you owe any taxes. Airbnb has some information that can help.\nIf Airbnb is worth so much and has hosts all over the world, why is New York important?\nNew York is not the only city that is taking issue with Airbnb, but it is the most serious case.\nNew York represents a major market for Airbnb. The city that never sleeps had 19,521 listings for places to lay your head as of Jan. 31, according to Skift and data firm Connotate.\nAirbnb is already in 33,000 cities, but a lot of those do not have the kind of legal restrictions of the Big Apple. So if Airbnb can make it there, they can (probably) make it anywhere.\nI'm not going to rent out my apartment, nor am I going to rent someone else'e apartment. Why should I care?\nThis case directly impacts only Airbnb and its hosts. The broader questions have consequences for any number of consumer-focused peer-to-peer startups.\nVarious companies have sprung up to take advantage of privately owned but not entirely utilized assets like apartments, cars and even tools. Ever hailed a private car on Uber or found some help on TaskRabbit? Then you've participated in the sharing economy.\nRight now these startups might seem small, but in 2013 Forbes estimated that the sharing economy would divert $3.5 billion of capital.\nHave something to add to this story? Share it in the comments."^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2014/04/26/new-york-vs-airbnb/>