Will Airbnb pay its accumulated tax debt to SF?

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Send us the Benjamins, Airbnb.

So now that Airbnb has agreed to start collecting and paying the transient occupany tax in San Francisco sometime this summer — finally acknowledging that’s the only workable way to meet the tax obligation it shares with its hosts — that leaves open the question of whether this $10 billion corporation intends to pay the tax debt it has accumulated for years while trying to duck its responsibility to the city.

That’s at least several million dollars that the city could really use right now. As we’ve previously reported, Airbnb commissioned and publicized a study in late 2012 claiming its San Francisco hosts collected $12.7 million from Airbnb guest in fiscal year 2011-12, meaning they should have collected and remitted to the city $1.9 million.

In early 2012, the San Francisco Tax Collector’s Office held public hearings to clarify whether the TOT applies to the short-term rentals facilitated by Airbnb and similar companies, ruling in April 2012 that the TOT does apply to those stays and that it is a “joint and several liability” shared by the hosts and Airbnb, which conducts the transaction and takes a cut.

As we also later reported, despite heavily lobbying during the hearing and being acutely aware of the outcome and its resulting tax obligation, Airbnb simply refused to comply and tack the 15 percent surcharge onto its transactions, as similar companies such as Roomorama were doing.

So if Airbnb was really being the good corporate citizen that it’s now claiming to be, it would not only start charging the 15 percent fee and sharing that money with the city, it would also cut San Francisco a check for around $4 million, or whatever the tax would be on what this growing business has collected from its guests since April 2012.

That’s at the very minimum, giving the company the benefit of the doubt that there really might have been an honest difference in opinions on whether the clear language of the tax code really applied to its transactions. But if we really wanted to be sticklers about this, Airbnb would actually owe the city millions of dollars more than that, going all the way back to its founding in 2008.

“The April 2012 regulation did not change the tax.  It provided more information about the definition of room and the merchant of record in a transaction.  We have always expected for operators to collect and remit the applicable transient occupancy tax,” Greg Kato, the policy director for the San Francisco Tax Collector’s Office, tells the Guardian, later adding that short-term stays “have always been taxable,” even in apartments.

Airbnb continues to duck questions from the Guardian, including our latest on whether it intends to pay its back tax obligation, and the Chronicle didn’t raise the issue with Airbnb. But a statement that Airbnb’s David Hantman put out on the company's website yesterday does offer some clues about its change of heart.

After announcing plans to collect and remit the TOT in Portland last week, Hantman said he held a question-and-answer session with its hosts in San Francisco “and announced that we’ll soon be collecting and remitting taxes on behalf of our hosts in San Francisco as well.”

Note the legalistic language that continues to avoid accepting that the company is also responsible for that tax debt, not just its hosts. But it appears the company finally realized it can’t just pass the buck to its hosts.

“We have repeatedly said that we believe our community in San Francisco should pay its fair share of taxes. We know from countless discussions with our hosts that they want to pay taxes, but some of these rules are arcane and difficult to follow. Some hosts have even tried to pay taxes in San Francisco and been turned away,” he wrote.

But that statement is a deceptive one, avoiding the fact that short-term stays are actually illegal in San Francisco, violating Administrative Code Section 41A, as well as a variety of planning and zone codes that prevent tourist hotels from being located in residential areas.

That’s why Airbnb hosts have had a hard time paying their taxes, as the Guardian has repeatedly reported, not because “these rules are arcane and difficult to follow.” It’s because Airbnb’s business model isn’t legal, something that Board of Supervisors President David Chiu has been trying to create legislation to address, although negotiations have now dragged on for more than a year.

“We want to help solve this problem. We’re still working on some operational details, but our goal is to launch this program for San Francisco hosts this summer,” Hantman wrote, making the company sound helpful and oh-so-public spirited.

Given that any decent coder could probably figure out how to add a 15 percent surcharge onto Airbnb’s San Francisco transactions in less than an hour, I’m a little skeptical about the “operational details” that will drag its tax compliance out for several more months. My guess is it is trying to retain some political leverage in negotiations over the Chiu legislation.   

“We are a growing company in a new economy. We are taking this action—and initiating our entire Shared City program—as we strive to help make cities stronger, safer, more financially stable. And we’re excited to continue this pilot program in San Francisco. This city is our home and we look forward to continuing to work with everyone here to make it an even better place to live, work and visit,” was how Hantman closed his post.

Hopefully that means San Francisco can expect a $4 million check from Airbnb any day now. 

Comments

Weekly papers have had ad's for adult services for decades?

Will the SFBG pay taxes on all the untaxed BJ's it has enabled?

Poor Steve Jones such a sour hypocrite.

Posted by Guest on Apr. 01, 2014 @ 4:47 pm

The double stanndard endures

Posted by Guest on Apr. 01, 2014 @ 5:29 pm

A commenter pointed out yesterday that Steven would be back today with a new demand. That commenter was spot-on right. The appetite of the left grows by what it feeds upon.

Posted by Guest on Apr. 01, 2014 @ 5:02 pm
Posted by Guest on Apr. 01, 2014 @ 5:20 pm

Do you remember when you were a baby and your parents or grandparents would give you a gift? Even if it was the best gift in the world, it wasn’t Christmas or a birthday if it was just one gift.

Posted by clipping path on Apr. 01, 2014 @ 5:10 pm

Steven mistakenly says "Airbnb simply refused to comply and tack the 15 percent surcharge onto its transactions, as similar companies such as Roomorama were doing."

Which is not true.

Roomorama provides hosts with the option of adding tax, but many hosts simply ignore it.If you go to Roomorama you'll see that many (probably over 50%) of the San Francisco listings say "Tax: No" and Roomorama processes the listings anyway.

Here is an example listing (easily found) showing that Steven is wrong:

http://bit.ly/OcyEoa

Posted by Guest on Apr. 01, 2014 @ 5:14 pm

collect the tax or decline and pay the city himself.

Posted by Guest on Apr. 01, 2014 @ 5:28 pm

not to the casual subletting of a primary home.

Posted by Guest on Apr. 01, 2014 @ 5:26 pm

home. The left hates the sharing economy because it slips between the cracks of their flawed monolithic laws

Posted by Guest on Apr. 01, 2014 @ 5:37 pm

Dear SFBG-
I contracted gonorrhea from a visit to a prostitute in 2008. You facilitated and profited from this transaction through your publication. You put me in touch with the prostitute just as AirBNB does with local hosts.

My medical bills were $4,734.31. Who can I send the bill to so that SFBG will live up to its obligations?

Thank you,
Fred G.

Posted by Fred G. on Apr. 01, 2014 @ 5:29 pm

you cannot make demands on them.

Go after the hosts if you think you have a case.

Posted by Guest on Apr. 01, 2014 @ 5:31 pm

so I can cross reference it with rent-controlled units. I guarantee you there are attorneys and building owners doing that right now. This is going to be a bonanza for getting rid of a lot of dead weight!!!

Posted by Guest on Apr. 01, 2014 @ 5:44 pm

evictions of long-term SF tenants?

I would laugh my ass off.

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

The law of unintended consequences. Progressives think it doesn't apply to them. They're wrong. Every. Single. Time.

Posted by Guest on Apr. 01, 2014 @ 6:03 pm

"That’s at least several million dollars that the city could really use right now"

I'll say!

Harvey Rose forecast in December that pension and healthcare costs for current and former city employees are set to rise 11% annually into the future amid the $1.8 billion pension shortfall

The "City Family" needs and deserves its sweet defined-benefit pension plans.

Only one solution: Raise taxes. Otherwise it has to be bankruptcy, folks.

Posted by Guest on Apr. 01, 2014 @ 5:59 pm

A bankruptcy judge has the power to roll back the pensions and healthcare benefits of city workers, as we've seen in Detroit.

If the politicians are too spineless to rein in these costs, then let's generate a crisis and have a judge do it.

Posted by Guest on Apr. 02, 2014 @ 5:46 am

I'd much prefer capitalist dictatorship to socialist democracy. When the people make the wrong choices, the financial sector needs to step in and protect the investor class against the mob.

Posted by Guest on Apr. 02, 2014 @ 7:06 am

That's true...it is voluntary and AirBNB did a lot more than what they had to do.

They could have said that they will just identify the tax amount on the web site but filing and remittance is the obligation of the host. This is exactly what Priceline, Expedia, Orbitz and the rest do (they all make it very clear in their TOS).

I have no idea where Steven got the idea that AirBNB was "finally acknowledging that’s the only workable way to meet the tax obligation it shares with its hosts". That acknowledgement exists only in his confused thinking process.

AirBNB stepped up and made things easier for the city and for their hosts. It probably does have something to do with a future IPO and questions about how they deal with local regulations -- now they can say that they have gone beyond what was necessary

Posted by Fred G. on Apr. 01, 2014 @ 6:56 pm

relocate out of the city and then give the city the finger.

Posted by Guest on Apr. 02, 2014 @ 5:47 am

A few months back Steven was complaining that the city didn't allocate around 800 million dollars to increase bike ridership and make the city "safe enough" that there would be no pedestrian fatalities (the current budget ended up allocating around 35-40). He wrote that he found 200 million if the city made cars pay extra (big surprise). He doesn't know (or care) where the rest would come from. But a few paragraphs later, he wrote that based on current budget projections, in a few years the city would end up millions in the hole. Uhhhh...

Steven never considers WHERE the money to pay for all the things the city pays for. He just expects it to magically appear. Though to be fair, he wants landlords, tech companies, and car owners to give the city more money than they already do. But he doesn't want them to be here.

Posted by Guest on Apr. 08, 2014 @ 6:03 pm

not be profiting from their activity.

If SF says a tax is due, then that implies that the city thinks their activity is legal here.

You cannot have it both ways.

Posted by Guest on Apr. 02, 2014 @ 5:48 am

And the portions so small!

Posted by Chromefields on Apr. 02, 2014 @ 12:41 pm

Chronicle has the sotry today about record evictions of tenants using airbnb:

http://www.sfgate.com/bayarea/article/Eviction-notices-soar-as-S-F-clamp...

Well done, Steven.

Posted by Guest on Apr. 07, 2014 @ 7:17 am
Posted by Guest on Apr. 07, 2014 @ 4:32 pm

Lots of burned out old social workers and "activists" are going to be looking for new digs in West Oakland and Hayward soon!!

Posted by Guest on Apr. 07, 2014 @ 4:56 pm

First he does the Airbnb thing himself

Then he gets caught.

Then he turns on Airbnb as if it were their fault he broke the law.

Then his campaign against Airbnb is a huge success, at least in his own mind.

Then lots of Airbnb-doing tenants get evicted as a result.

Bang up job, asswipe.

Posted by Guest on Apr. 07, 2014 @ 5:18 pm

If you had _any_ evidence that he indeed was a user of Airbnb, you would have linked to it.

Steven's not been caught at anything wrong associated with Airbnb, asswipe.

Posted by Guest on Apr. 07, 2014 @ 8:05 pm

Other than the story he wrote about renting his apartment out on AirBnB?

Posted by Guest on Apr. 07, 2014 @ 8:29 pm

He wrote an article here on it.

Posted by Guest on Apr. 07, 2014 @ 8:32 pm

Oh, right. And I suppose that you know something is true just because Steven wrote about it in an article.

Posted by Guest on Apr. 07, 2014 @ 9:16 pm

Wait a sec. Your theory is that we shouldn't believe it because Steven could lie and say that he used a service that he hates with a passion? Writing this could also possibly leaving himself open to eviction for breach of lease. And he did all this because why exactly???

Posted by Guest on Apr. 07, 2014 @ 9:31 pm

Here you go dumb-dumb. In Steven's OWN words -

http://www.sfbg.com/2012/05/01/problem-sharing-economy

Here's a quote from there in case the link is too hard for you to follow: "Frankly, I knew that my lease didn't allow subletters, but my building is big, I really needed the money, and I figured that I wouldn't get caught." Yeah I can see why he would make this all up.

He KNEW it was illegal, didn't care, and he kept pushing the AirBnb thing. You know what he got for his advocacy? He just gave landlords a big hammer to clobber rent control tenants or tenants he just wants out but can't find any other way to eject them. Those renters who he supposedly stands for and were illegally subletting their units are now starting to get evicted. Whoops.

Posted by Guest on Apr. 07, 2014 @ 11:14 pm

But he's one cool dude and he goes to Burning Man so cut him some slack.

Posted by Guest on Apr. 08, 2014 @ 8:37 am
Posted by Guest on Apr. 08, 2014 @ 9:15 am

That would be Fleet Week when we get to cheer our armed forces and show deep patriotism.

Posted by Guest on Apr. 08, 2014 @ 11:14 am

But I was of course referring to the week when all the weirdos go to burning Man.

Posted by Guest on Apr. 08, 2014 @ 11:46 am

Now that is something I want to read written by him. Where is the article's link?

Posted by Guest on Apr. 07, 2014 @ 10:07 pm

Progressive policies have been getting people kicked out of their homes for years, but this latest example of their bumbling ineptness is pretty spectacular. The truly pathetic thing about this is that Steven's blog about squatting Airbnb was one of the main instigators in landlords deciding to crack down on tenants' illegal subletting - and it was a troll post. Steven only posited that ridiculous idea as an attempt to cause property owners stress and anguish. He knew no one was actually going to try and pull that shit. But he can't resist fucking with property owners; whom he sees as faceless capitalists. He was warned by more than one poster (I know I warned him) that he was only going to spur property owners into action, that his trolling was going to have real-world consequences for a lot of tenants, but his hatred prevents him from seeing the big picture. Ultimately, it doesn't matter how many SF tenants get burned, as long as Steven gets to score some imaginary points in his imaginary revolutionary wet dream.

Posted by Snoozers on Apr. 07, 2014 @ 5:17 pm

Steven thought all his writings would screw with AirBnb because he has a hard on for them (I still really don't know what's his huge issue with them though). In reality it's now the landlords who are using it to hammer tenants and giving them just cause to evict those they want out for violating their lease. Good job Steven.

Don't progressives ever learn about unintended consequences? Remember how the state legislature banned "open carry" in CA after one of those mass shootings (I think it was Newtown)? It was some feel good measure because they wanted to look busy and act like they were doing something. But the only people who ever really open carried were law abiding citizens from suburbia. But it SOUNDED good, right? "We're taking more guns off the street." Well because they didn't think things through, CA will now become a "shall issue" CCW state. Good job legislators.

And this leads into the next issue progressives should really stop bitching about. Giving tax breaks to tech (or any other) companies that do business in SF and kicking "techies" out of the city. You know what happens when companies leave a city? They take all the tax money they and their employees pay to that city and give it to another city. You know what happens then? No more money for nonprofits, no more money for SEIU, no more money for Muni, no more money for police (although some progs would probably like that. At least up until they get robbed and beaten up by a couple of guys who have no fear of the police). There's a reason why Oakland has the highest per capita robbery rate in the country. Half a police force. Good job guys.

Posted by Guest on Apr. 07, 2014 @ 6:04 pm

I know a teacher similar to the one profiled who would supplement her income via AirBnB. I'm not sure how far along her eviction is, but last I heard, it's not going well.

Such a sad irony.

Posted by Guest on Apr. 07, 2014 @ 5:22 pm

The person who gave me this information didn't want to be quoted but I have it on good authority that one of the Google buses is about to be renamed 'The Steven T Jones' for his role in creating housing opportunities for tech workers in SF.

Posted by Guest on Apr. 07, 2014 @ 5:24 pm

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Posted by Nadia J. Jacobsen on Jul. 11, 2014 @ 9:36 pm

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