By Jay Wrolstad
Tompkins County is the first government entity in New York State to reach a tax collection agreement with Airbnb, the popular online short-term home rental platform that connects local hosts with guests looking for lodging across the country and around the world.
Under terms of the “voluntary collection agreement,” approved by the county Finance Department on June 17, anyone booking rooms in Tompkins County through Airbnb will be charged the local 3 percent hotel room occupancy tax. The company will begin collecting the fees on July 1 and remit the proceeds quarterly to the county on behalf of local hosts.
“This agreement simplifies the process of collecting the room occupancy fees, as Airbnb will collect the tax for its hosts here, providing a service for them,” says Tom Knipe, Principal Planner and Tourism Program Director for Tompkins County. “It’s an administrative issue for us and creates a level playing field for the local lodging industry.”
Knipe explains that the county had required Airbnb hosts to register with the Finance Department and pay room taxes, but compliance was spotty. “We have many Airbnb hosts who are currently registered with the county and paying, but we also assume we do not have full compliance,” he says. “This agreement will bring us to 100 percent compliance.”
The county assesses a 3 percent room occupancy tax for sites with 10 rooms or fewer; 5 percent for those with 11 or more rooms.
“This is a very popular Airbnb community, one of the most popular in Upstate New York,” Knope says. “We have many weekends throughout the year when lodging is tight, and Airbnb helps meet that need for rooms.” In fact, Airbnb reported a huge spike in the Tompkins County occupancy rate during Cornell graduation weekend in May.
Local Airbnb host Jane-Marie Law was involved from the start with the talks between the company and the county that led to the agreement. She and Patti Witten organized a group of Airbnb hosts in an effort to get everyone to comply with the local regulation.
“I hounded local people to pay their taxes, met with the Chamber and also with the local bed and breakfast association head and ran workshops for people to show them how to sign up for taxes,” Law says. She also reached out to Max Pomeranc, the Airbnb representative for the Northeast. “He came to Ithaca on April 15 and stayed at my home and we had him meet with people at the Hotel School, the tax office, the tourism bureau and the county attorney,” she says.
“The reason I do this is because I think Airbnb is really good for our local economy. It allows people who live here to afford the high costs of living here,” Law says. “Furthermore, it makes it possible for local hosts to send their guests to local businesses. We provide a kind of local lodging experience that really is not competing with regular bed and breakfasts or regular hotels. My guests stay only in Airbnbs when they travel. Many of them are from Europe and they spend all their money in the local businesses I send them to.”
Law says that some hosts objected paying to the room tax, calling it a “greedy move” on the part of the Tourism Board. “People accused me of caving on having to pay this tax. I feel strongly that a tax like this is a good thing. As it is, I have been paying it out of my proceeds and I am glad it will be an add-on for the guests to pay now. That is only right,” she says.
Law notes that all Airbnb hosts get a 1099 tax form from the company. “Our income is reported and we have to pay tax on it. Most of us are making a small amount of money, just enough to pay our property or school taxes. For many of us, it is the difference between being able to continue living in Ithaca with its high cost of living or moving out,” she says. “Many of us are the very people who make this a great place to live: artists, musicians, activists, intellectuals, poets. Ithaca wants these people. We are value added to the community. But our professions cannot survive high taxes and high costs of living. This system, when done properly, is an excellent solution for the community.”
Knipe says that the new agreement will increase revenues for the Tompkins County Tourism Program, which annually invests more than $2 million of local hotel room occupancy tax revenues in community-based initiatives that promote economic development through tourism. The room tax fees support the performing arts, museums, festivals, agricultural tourism and outdoor recreation tourism—which in turn help draw some 1 million visitors to the county each year.
As an industry, in 2014 tourism in Tompkins County supported 3,500 local jobs and generated $190 million in local economic activity and more than $14 million in local tax revenues.
Jennifer Tavares, president of the Tompkins County Chamber of Commerce, which oversees the Convention and Visitors Bureau, agrees that the agreement with Airbnb is a positive development. “Online room-sharing is an evolving and growing market in Tompkins County. And from a business perspective, this agreement creates a fair playing field for all of those involved in lodging,” she says.
While most hosts do comply with the room tax requirement, Tavares says, “This sets the stage for everyone to be in compliance. It’s a positive development for other lodging businesses in the county, too.”
“Communities across New York are seeing firsthand that home sharing can bring much needed dollars into their local economies. Tompkins County, which has a large and vibrant host community, is leading the way on tax collection,” says Josh Meltzer, head of New York Public Policy for Airbnb. “We hope our work with Tompkins will serve as a model as we continue conversations with several other counties across the state.”
According to figures provided by Airbnb for Tompkins County for the year ending June 1, 22,400 guests stayed at an Airbnb listing, with 550 hosts who had at least one reservation. The average length of reservations was 2.6 nights, with a $149 average nightly rate. The total host earnings in Tompkins County were $3.2 million, with a mean host earning of $5,000.
Based on host earnings figures, and the 3 percent room tax rate, the county would receive about $100,000 per year from Airbnb business.
Airbnb has demonstrated a willingness to collect taxes for local communities, and the pact with Tompkins County represents a way to do that on the front end, with the local fee added to the guest’s bill, so that it does not affect the hosts’ bottom line.
In 2015 the company released a “Community Compact,” which outlines agreements with cities around the world to collect and remit hotel, occupancy and tourist taxes on behalf of its hosts and guests. Airbnb first began collecting and remitting these taxes in San Francisco and Portland in 2014.
To date Airbnb is collecting and remitting taxes in 190 cities, states, or other taxing jurisdictions around the world. Since its first agreements in 2014, the company has collected some $85 million in taxes worldwide.
By Jay Wrolstad