Before last July, Ky Fullerton, who rents his Gearhart home on Airbnb, knew he needed to collect and pay the city's lodging tax directly to the city himself.
Unlike Seaside, a mile to the south and in the same zip code, Gearhart did not sign a voluntary agreement that allows Airbnb to collect and pay local taxes in a lump sum each quarter.
In July, a new state law aimed to change that. The law clarified that booking platforms like Airbnb and VRBO had to collect and pay state and local lodging taxes on vacation rentals, regardless of these voluntary agreements.
But even after the law took effect, Airbnb listings in Gearhart still appeared not to list the local tax, Fullerton noticed. When he asked why, he received an email from the company saying the responsibility was on the homeowner.
“The issue I had was they are not collecting the local tax at all in Gearhart when similar providers are,” Fullerton said. “There’s the collection issue and there’s the transparency issue: Airbnb isn’t doing No. 1.”
Gearhart has yet to receive a check from Airbnb for the first quarter of lodging taxes this fiscal year, according to City Administrator Chad Sweet.
Six months have passed since the state law took effect, and Gearhart appears to be one of many cities still not receiving taxes directly from Airbnb, said Wendy Johnson, an intergovernmental relations associate with the League of Oregon Cities.
The situation is leaving some cities confused, Johnson said, as the requirement seemed “pretty clear.”
On a local level, the lack of clarity around tax reporting is causing bureaucratic issues, as well as putting some well-intentioned homeowners out of compliance without their knowledge, potentially jeopardizing their rental permits.
When the bill was introduced in Salem last year, the goal was to make it clear that Airbnb and other companies that promote short-term rentals are responsible for collecting and paying taxes, Johnson said.
But since the law was inked, Johnson has had many in the lodging industry ask when collection is supposed to start. So far, Airbnb appears to only be paying cities and counties with existing agreements, with one exception, she said.
Shortly after the law passed, Johnson said she provided a list of cities where taxes weren’t being collected to Airbnb, but received no answer about when the company intended to start collecting.
“They are literally just ignoring the law,” she said.
Laura Rillos, a spokeswoman for Airbnb, said the company is happy to work with communities to work out how to collect and pay taxes, but that there are “affirmative steps local jurisdictions need to take in order for Airbnb to legally collect and remit applicable taxes,” such as updating local ordinances to align with the new state law.
“We are eager to work with any jurisdiction throughout Oregon to set up the necessary mechanisms to collect and remit taxes on behalf of our community and ensure we are paying our fair share,” Rillos said in a statement.
Corvallis, which did not have a voluntary agreement with Airbnb, contacted Airbnb about collecting and paying taxes after passing a local ordinance that aligned with the state law. Nancy Brewer, the city's finance director, said after sending a series of emails, Airbnb responded and agreed to start collecting local taxes in October.
Writing an ordinance that aligns with state law does make the process smoother, Johnson said, but she feels it is ultimately Airbnb's responsibility to reach out to local governments — not the other way around.
"If you're going to take rental money from the community, you have to pay taxes due in that community. You are required by law to file,” Johnson said. “(Airbnb) needs to reach out to those cities and make sure they are complying with local tax laws like any other company.”
Part of what makes the situation difficult is that many of the taxing districts affected are smaller and can’t leverage pressure like a large city or county might. The biggest taxing districts in Oregon, like Portland and Washington County, have voluntary agreements with Airbnb and are already receiving money, Johnson said.
“Short of lawsuit, how do (smaller cities) enforce?” Johnson said. “(They) can’t afford to go toe-to-toe with Airbnb in court.”
With only about 80 rentals in Gearhart, and only some using Airbnb, Sweet expects the amount of taxes the city would get from the platform would be relatively small.
The lack of reporting, however, interferes with the section of Gearhart’s short-term rental ordinance that requires a permit holder to prove they are actively using their home as a rental. They do that by showing they’ve paid lodging taxes.
But if Airbnb is not collecting and paying the taxes to the city, like some would assume under the new law, homeowners could unknowingly be breaking the city’s ordinance.
“If you’re relying on (a) third party, you expect they are following all the rules,” said Peter Watts, the city’s attorney. “People not getting taxes paid might be completely unaware.”
Even if Airbnb did start paying the city directly, it would be in a lump sum, making it difficult for the city to cross-reference to see who paid their taxes and who didn’t. The city is facing similar difficulties with VRBO, which does collect and pay the tax, but doesn’t provide homeowner information.
Because these companies will not reveal where the taxes are coming from, the city warned permit holders in a letter that even if companies are collecting the taxes they could still be in violation of the city’s code.
“Unfortunately, the lack of reporting has put you, and other short-term rental owners, out of compliance with the city’s code,” according to the letter. “The city understands that this is likely being done without your knowledge and is interested in coming up with a solution that allows us to ensure that all taxes are being collected and paid.”
In the short term, the city is looking for ways to independently get the information from homeowners and cross-reference themselves — an exercise that creates extra work for both the city and residents.
“This disproportionately affects small cities,” Watts said.
To avoid any compliance issues, Fullerton provides a schedule to the city of when rooms were rented and through which booking site, and then lists whether he or another agency has paid the lodging tax.
“It’s just extra work. We’d always have to reconcile, but if Airbnb was doing this properly, we wouldn’t be sending (the city) a check,” Fullerton said. “The ideal solution would be for (the platform) to collect and remit the right amount, and provide the city with a level of detail.”