Airbnb finally agrees to pay its taxes in SF

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Airbnb finally comes clean with the city where it was founded and is still headquartered.

Airbnb has apparently finally agreed to pay its taxes in San Francisco. The San Francisco Chronicle is reporting that the company, long called out by Guardian articles and editorials as a tax scofflaw blatantly defying a city ruling, will start collecting and remitting the 15 percent transient occupancy tax by this summer.

Airbnb CEO Brian Chesky announced last week that it would start doing so in New York City, Portland, Ore. and other cities that take part in its vaguely defined Shared City program. That prompted us to send Chesky and other Airbnb executives an email on March 27 asking, “I'm wondering why you're willing to collect and remit taxes in Portland, but you've been unwilling to do so in San Francisco, the city where you're headquartered and where the city ruled more than two years ago that you should be doing so?”

They never responded to that inquiry, which is part of the company tactic of stonewalling the Guardian on an issue that we were the first to report over a year ago when we discovered the company was simply refusing to pay a tax bill that our reporting found amounted to nearly $2 million annually in late 2012, and probably significantly more now.

The San Francisco Tax Collector’s Office ruled in April 2012 that Airbnb should be paying the TOT on the thousands of local stays that it facilitates, and that the company and its individual hosts were jointly liable for that tax obligation. But because Airbnb’s business model violates local laws against short-term rentals, it was difficult for individual hosts to get the license they needed to collect and pay the tax.

What prompted Airbnb’s sudden change of heart? Were they feeling the pressure? The Chronicle article doesn’t really make that clear, but we’ll let you know what we hear.

Comments

Posted by Guest on Mar. 31, 2014 @ 6:40 pm

Yes, it was obviously the pressure from Steven T. Jones. Why else would AirBNB begin collecting taxes in New York, Portland and San Francisco.

Really...how could any company expect to stand up to Steven T Jones and the 7 or 8 people who read his stuff with a straight face,

Posted by Guest on Mar. 31, 2014 @ 7:03 pm

You tards just can't help yourselves can you? Always running and flapping your little miniature brains crying out to your antihero, your boyfriend, the man you love to hate but just you can't leave him, cause he's all you got.
"Oh Steven! Steven! Please notice my lonely troll ass! I gots the angry hardons fer yer librul politics and I needs attention!"

Posted by Guest on Mar. 31, 2014 @ 10:51 pm
Posted by Guest on Apr. 01, 2014 @ 6:41 am

$2 million a year in taxes. woppydoo. well that showed them and everybody.

Posted by Dani on Apr. 01, 2014 @ 9:42 am

Who wants to make a bet Steven will soon be finding his NEXT objection - the one he always REALLY had about this kind of business?

Posted by Guest on Mar. 31, 2014 @ 7:07 pm

AirBnb or one of its competitors should develop a service specifically for 1 - 6 month business travelers. That market segment is not taxable under the hotel tax and does not conflict with the current rent control laws.

Posted by Guest on Mar. 31, 2014 @ 8:03 pm

one to six month rentals. Easy enough to find and, if you pick carefully, they always leave. Foreigners on business, academic or tourist visas are perfect, and rarely assert their rights.

Find them through Craigslist or foreign websites like Gumtree in the UK, and there is no fee and, of course, no tax.

Less hassle than constantly dealing with turnover and of course much less risky than being stuck with rent control royalty.

Posted by Guest on Apr. 01, 2014 @ 5:47 am

So this change is great for CraigsList and also for Airbnb's competitors who are not effected by it.

I like Airbnb but the city has now forced me to not use them, and choose their competitors instead.

Posted by Guest on Apr. 01, 2014 @ 6:45 am

Of course, residents will get no tangible benefit from these new revenues as the greediest City employees on earth snort up all the revenue....

Posted by Guest on Mar. 31, 2014 @ 8:07 pm

I'm not sure, but based on this post from Airbnb today:

http://publicpolicy.airbnb.com/san-francisco-taxes-airbnb-community/?af=...

It looks like Airbnb is asking it's HOSTS to Pay the TAXES it owes. What do you all think this means and what do you think of it

If this is what they're saying, then they are greedier than we thought. Independent contractors at any company don't usually pay city taxes for the company that they work for.

Airbnb is a multi-billion dollar company. They can better afford to pay this tax that their hosts.

Posted by Guest Marcia on Mar. 31, 2014 @ 8:47 pm

declaration that they will pay the tax and, in those cases, will not have to withhold.

Posted by Guest on Apr. 01, 2014 @ 5:48 am

Here is the post that Airbnb sent to it's hosts today:

http://publicpolicy.airbnb.com/san-francisco-taxes-airbnb-community/?af=...

It appears that they want their HOSTS to Pay their taxes.

Independent contractors don't usually pay taxes to the city for the company they work for. Airbnb is a multi-billion dollar company. They should pay city taxes, not their hosts.

Posted by Guest Marcia on Mar. 31, 2014 @ 8:51 pm

Or have you never stayed in a hotel in San Francisco?

Posted by Guest on Mar. 31, 2014 @ 8:58 pm
Posted by lillipublicans on Apr. 01, 2014 @ 12:03 am

or over Airbnb's competitors who are based outside SF.

So the city can whine all it likes about taxes but it cannot enforce collection.

Meanwhile many hosts do not believe a hotel tax should apply anyway, and that will go to court at some point

Posted by Guest on Apr. 01, 2014 @ 5:49 am

I'm not. I'm a San Franciscan and I've stayed many times at hotels in the city when my home was being remodeled, when I have long meetings followed by early meetings the next morning etc... Newsflash - you pay the hotel tax whether you're a resident of SF or not. The guest ALWAYS pays the hotel tax in addition to the cost of their room - you're informed about this salient fact when you make your reservation.

Posted by Guest on Apr. 01, 2014 @ 1:52 pm

Yes, I've stayed in hotels in San Francisco, and it's very different than staying in an Airbnb. Very different, and Airbnb hosts are Not hotels. But that's another issue'.

The issue here is that Mr. Jones and the Bay Guardian are not reporting the facts correctly. It is Not Airbnb, a multi-billion dollar company that is paying the taxes. They are dumping on their hosts, or hosts and guests to pay the taxes.

Posted by Guest Marcia on Apr. 07, 2014 @ 12:54 pm

from your link: Part of our first Shared City partnership with Portland will be to collect and remit occupancy taxes on behalf of our hosts there. Today, I held a question and answer session with hosts from San Francisco to talk about the Shared City initiative and announced that we’ll soon be collecting and remitting taxes on behalf of our hosts in San Francisco as well.

AirBnB is going to remit the taxes on behalf of the hosts. I'm not sure what your point is. If someone rents their space for $100, of which AirBnB gets, say, 5%, are you saying that the tax should only be on the 5%? Of course not, it should be on the 100%. So the $14 is going to be added to the price of the room and AirBnB will pay that $ on behalf of the host. What is your issue with this?

That said, if rentals under 30 days are illegal in SF, where does the city come off taxing them, thereby basically allowing the rentals? I guess drug dealers owe taxes too (but I guess their supplier should be the one paying them, per the new AirBnB model).

no sympathy here for tenants who violate their lease and get the boot. If you're such a knucklehead that you go and rent out your precious rental unit without doing any research into whether your lease/landlord allows it, you pretty much deserve what may happen to you.

Posted by GuestD on Apr. 01, 2014 @ 6:27 am

People keep saying that but provide no cite. Moreover even if there were such a law, it's not clear whether it is constitutional nor whether it could be enforced.

Re the tax, my understanding is that it is still ultimately a host responsibility. Obviously Airbnb's competitors are not affected by this and, if they are located outside SF, then the city would have no leverage or jurisdiction over them.

If a host volunteers to pay the tax himself, then presumably Airbnb would not.

Posted by Guest on Apr. 01, 2014 @ 6:40 am

SF Admin Code section 41A should dispell the myth that these arrangements are legal in SF. Nobody has challenged the constitutionality of it.

And the tax was found to be joint and several, i.e. both parties are equally responsible for them. AirBnB is going to collect the tax on behalf of their client by tacking on a 14% charge to the transaction. It is pretty simple.

Does this put them at a competitive disadvantage? For now, yes. But I find it hard to believe that the other companies providing the similar service won't soon be doing the same thing.

I would imagine that AirBnB wants as many ducks in a row legally/politically before going public. And if playing along with SF and caughing up appx. $2m a year is the price they need to pay (or, is making their clients pay), than that is chump change and just the cost of doing business.

Did the SFBG play a part in getting this action, I'd say probably a bit. But I also don't think that it is pure coincidence that this happened so soon after their $10B valuation last week.

Posted by guestD on Apr. 01, 2014 @ 8:11 am

specifically to housing unit conversions and demolitions.

There is usually no formal conversion or change of use when an owner engages in occasional sublets, nor when a rental unit continues to be used for that purpose.

In fact, the city's code formally accepts that there can be rental periods of less than 30 days by stating that rent control only kicks in after 30 days - a statement that would be pointless if shorter tenancies were barred.

The fact that nobody has challenged the constitutionality of any such prohibition doesn't mean that it would be contsitututional. since the rule isn't enforced, and probably cannot be enforced, it's moot at this point but may arise if the city tries to follow up.

The opinion that the tax is "joint and several" is merely the opinion of the city. Again, not tested in court.

Finally, Airbnb's competitors do not have to follow this because they are not based in SF - a a key problem for Airbnb and I would not blame them if they move. They are now 14% more expensive than their rivals

Posted by Guest on Apr. 01, 2014 @ 8:31 am

especially the part where it says: It is the purpose of this ordinance to benefit the general public by minimizing adverse impacts on the housing supply and on persons and households of all income levels resulting from the loss of residential units through their conversion to tourist and transient use. This is to be accomplished by regulating the conversion of residential units to tourist and transient use, and through appropriate administrative and judicial remedies.

Tourist or Transient Use. Use of a residential unit for occupancy for less than a 30-day term of tenancy, or occupancy for less than 30 days of a residential unit leased or owned by a business entity, whether on a short-term or long term basis, including any occupancy by employees or guests for less than 30 days where payment for the residential unit is contracted for or paid by the business entity.

I'm also suspect about your statement that ABB's competitors don't have to pay this bc they are not based in SF. The transaction is for an SF property, the money being generated is in SF. Isn't that what is being taxed, the transaction, not AirBnB as a SF entity? I don't think if ABB moved its HQ to Oakland that it would affect this tax whatsoever.

I'm no master on this subject, but that is my take on it...

Posted by guestD on Apr. 01, 2014 @ 8:50 am

of a housing unit to transitory use. Most of section 41 is about subdivisions and condo conversions, and its reference here to transitory use is parenthetical.

Such a conversion implies an affirmative submission of permission to the city for a permitted change of use. That isn't what is happening here where, for the most part, the unit continues to be the primary home of the owner and he merely sublets all of it some of the time, or some of it (i.e. a room( some or all of the time.

41a also doesn't target units already rented out. Tenants should not be subletting but that is covered by section 39 (the rent ordinance) and not section 41 (subdivisions).

So where does 41a apply? Not for tenants and not for owner-occupiers as already noted. It applies where an owner does not live there and formerly had the unit rented out to a long-term tenant under rent control. In such a case, if the owner evicts and then runs something like a B&B from there without a hotel license, he will run into a problem.

There are typically 2,000 SF units on Airbnb at any one time. I'd offer that few of them fall foul of 41a.

To your other point, SF has more leverage over Airbnb because of their HQ here. I believe that is why Airbnb caved but their competitors have not. You are correct that the money is being generated in SF but that implies SF can only be sure of getting their tax by going after an SF entity which, most of the time, will be the host.

If the tax is valid then SF is relying on the goodwill of those outside their jurisdcition. They can only get heavy with people and entities in SF

Posted by Guest on Apr. 01, 2014 @ 9:17 am

One that nobody but you seems to have. Not the BOS, not the 100's of articles written in various publications on the subject, not attorneys who practice in this area of the law. Not to mention the plain language of the Code itself. But hey, you're entitled to your interpretation, I just wouldn't bet a whole lot of money on your stance.

As to your other point, why did AirBnB "cave" in Portland? What leverage does SF have over them merely b/c they have HQ here?

To be honest, I really don't have the time or desire to continue this thread.
Good luck to ya

Posted by guestD on Apr. 01, 2014 @ 9:45 am

speculating on what it really means. As i said, I would be stunned if it were held to apply to a homeowner occasionally renting out a spare bedroom overnight, for the simple reason that no conversion or change of use is implied by that.

Moreover I follow these things closely as I have been doing short-term lets for 15 years and neither my lawyer nor the city have indicated there is any problem with the way I do it.

You are claiming to have the definitive knowledge of 41a but you provide no basis for us to asses whether you have real-life experience as I do, or whether you are practicing the "law of hope and wishes".

I agree the Portland case is odd but answer me this if you can (and I'm betting that you cannot) - what is a business like airBnb were based in, say, Switzerland? Clearly it could be, as an internet business can be anywhere. What would SF then do if they refuse to collect the tax? Contact the state department? Good luck with that.

Looks like you ducked the debate just in time!

Posted by Guest on Apr. 01, 2014 @ 9:59 am

Every major claim you made in this post and the first one of this thread, Guest, is completely wrong. Ergo, you're an idiot, so whatever you'd "be stunned" to learn about your mistaken beliefs is really of no consequence to the rest of us. 

Posted by steven on Apr. 01, 2014 @ 10:17 am

supposed to accept that?

Despite his obvious inability to address or debunk any of the criticisms made?

Having a hissy fit and calling people "idiots" when they present well-argued, well-reasoned and informed criticisms of your position doesn't make your paper look like a very serious journalistic endeavor.

I have received legal advice that 41a does not apply in a wide range of common situations and that, moreover, it is not enforced. Refute that if you can.

Posted by Guest on Apr. 01, 2014 @ 10:27 am

But you ARE idiots who live in a constant state of hissy fitness.

Posted by marcos on Apr. 01, 2014 @ 11:30 am

make a little cash on the side from an occasional short-term let of a bedroom.

Posted by Guest on Apr. 01, 2014 @ 11:37 am

Do they tax drug dealers, hookers or muggers and require that they get a license? No.

They'd be better off levying these "$1,000 a day" fines allowed under 41a. Except of course that the city doesn't enforce it.

Posted by Guest on Apr. 01, 2014 @ 10:33 am

and, at $1,000 a day damages, that could be very profitable if it worked.

So if the law firms in SF thought they could make easy money acting on 41a, they surely would. Yet I do not know of a single case.

I agree with the earlier analysis. 41a applies only for a real change of use and not to occasional sharing of a home.

Posted by Guest on Apr. 01, 2014 @ 10:49 am

where I wrote: "I'm no master on this subject, but that is my take on it..."
Hardly a portrayal of myself as having "definitive knowledge."

And yes, if it gets you hard, and I'm sure it does, feel free to crown yourself the victor in this "debate" (ironic, since in the first sentence of your post you say that you are speculating)

Posted by guestD on Apr. 01, 2014 @ 10:56 am

One thing I have learned over 15 years of pushing the envelope on LL-TT issues is that no law has blanket applicability. In the end, it's always up to whether a plaintiff or law firm considers a case worth the risk and to what extent a judge agrees about where the law applies and where it does not.

My judgment here is that 41a applies to a fairly well-defined and limited set of circumstances, notably where a property owner permanently switches a unit from LT rentals to SF rentals specifically to sidestep rent control. (And that does happen. A lot. I've done it myself.)

Where it is highly doubtful that it applies is where an owner sublets his own home while retaining it for his long-term residential use. Ergo, no conversion, ergo, no 41a.

A much better approach would be for the city to ask itself why it has made being a long-term LL such an unattractive options that owners want to do this in the first place?

Posted by Guest on Apr. 01, 2014 @ 11:13 am

I use someone's home in Paris for two weeks and they stay in my home.

OK, they are not paying directly to rent my home, but they are providing something of equal value. Does 41a cover that? I don't think so.

My cousin comes to stay in my home for the last week-end in every month and pays me $200 for the use of my home. Illegal under 41a?

Each summer I host some Europeans in my home and they pay for "room and board". Illegal under41a?

You cannot blindly claim that 41a applies everywhere. It's a case by case thing.

And ultimately it would be a nightmare to enforce, which is why it isn't enforced. You might as well pass a law that says that I have to pee sitting down in my own home.

Posted by Guest on Apr. 01, 2014 @ 10:12 am

Chapter 41A

Posted by guest on Apr. 01, 2014 @ 8:22 am

Is that the sole basis of your claim?

Posted by Guest on Apr. 01, 2014 @ 8:33 am

hotel tax should apply to informal short-term sublets, and I think most hosts would agree. I suspect Airbnb will lose business here to rivals who are not adopting such a conciliatory policy.

And if those rivals are based outside SF, there isn't much the city can do about that. so why hurt a home-based business and favor out-of-town businesses?

Posted by Guest on Apr. 01, 2014 @ 7:00 am

It's about time AirBnB started collecting and then forking over TOT to the City. Next step is a Health/Safety Check. How many AirBnB homes do think have smoke/C0 detcors in each bedroom? How many hotels do you think could get away with NOT having them?

It's just a matter of time befores ome innocent tourist baby gets burned alive in someone's firetrap apartment?

Posted by Charlie on Apr. 01, 2014 @ 4:23 am

want to have such short-term rentals at all?

That's obviously your intent, since you want to tax and regulate the business so much that it cannot persist.

When you stay with a friend, do you demand they install smoke detectors?

Posted by Guest on Apr. 01, 2014 @ 5:51 am

The over litigation of home-based economies is a disaster and this is appalling. Californian liberals need to realize that their rhetoric of racial harmony and social mobility are at odds with the way in which any attempt at developing home-based economies is immediately over-regulated and stifled. It's enough to make you think the republicans are on to something (if the rest of their nonsense wasn't so insane). Its pretty clear why minority populars excel on the east coast in far greater numbers than the west. If you aren't already rich in californian, don't even pretend its the place for development and innovation. They will find a way to squeeze that out of you and push you into a neighborhood where you neither need to be seen or heard.

Posted by Nonesense on May. 25, 2014 @ 8:19 am

The over litigation of home-based economies is a disaster and this is appalling. Californian liberals need to realize that their rhetoric of racial harmony and social mobility are at odds with the way in which any attempt at developing home-based economies is immediately over-regulated and stifled. It's enough to make you think the republicans are on to something (if the rest of their nonsense wasn't so insane). Its pretty clear why minority populations excel on the east coast in far greater numbers than the west. If you aren't already rich in California, don't even pretend it's the place for development and innovation. They will find a way to squeeze that out of you and push you into a neighborhood where you neither need to be seen or heard.

Posted by Same as Above without Typos on May. 25, 2014 @ 8:21 am

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