Legislation introduced in the California state senate this week seeks to ensure that people renting out homes or rooms on sites like AirBnB pay visitor taxes on those rentals.
More than 400 cities and 55 counties in California allow residents to rent out part or all of their homes and levy a transit occupancy tax on those rentals. But payment is sporadic and municipalities often have no way of knowing who in their community should be paying the tax.
Senate Bill 593 would require operators of vacation rental services like AirBnB to report to local authorities the location of the residences, the number of nights they were occupied by visitors and the amount paid for the rentals. Cities could then use that information to ensure they get the taxes they’re owed.
San Francisco has raised over $200 million per year from the tax in recent years, and some of that is lost to private room rentals. The money typically pays for government services associated with non-residents, such as transport systems and tourist attractions.
“The Sharing Economy is all about sharing in our states prosperity and that means taking care of our roads, parks and making sure our communities are safe,” said the bill’s sponsor, Senator Mike McGuire, a Democrat for Healdsburg, in a statement.
The bill would also stop vacation rental platforms from allowing rentals in communities where they are prohibited by local ordinance.
It also allows cities to establish local laws that would levy fines for non-compliance. A first offense could be fined at up to $1,000 per day, a second violation could be fined at up to $2,000 per day and subsequent violations at up to $5,000 per day.
AirBnB already collects transit occupancy tax automatically on rentals in a handful of areas, including two in California: San Francisco and San Jose, which levy a respective 14 percent and 10 percent tax on rentals of less than a month. The site also collects taxes on behalf of Washington, D.C.; Chicago, Illinios; Multnomah County and Portland in Oregon; and Amsterdam in The Netherlands.