Why Airbnb just wrote a letter to New York legislators begging to pay more taxes

Today, on Tax Day here in the USA, room rental startup Airbnb sent a letter to the New York State legislature indicating that the company really wants to pay its fair share of taxes - tens of millions, to be exact.

It's possibly the most excited anyone's ever been to pay taxes, which might raise some suspicions.

Airbnb asks simply that it be allowed to collect the required hotel taxes on behalf of its hosts and guests and submit them directly to the state. Airbnb claims that "tens of millions" in revenue for the state is at stake.

The company is already doing this in places like San Francisco, Portland, San Jose, Chicago, Washington, D.C., and Amsterdam.

"While other companies frequently attempt to avoid paying taxes, Airbnb has been working with governments around the world to help collect more tax revenue," says the letter, which is signed by Airbnb Head of Global Public Policy David Hantman.

So what's going on here? Nobody is that excited to pay taxes.

The issue here is usability for Airbnb hosts. Rental income past 14 nights per year is generally considered taxable. Airbnb can't stop the IRS or the state from charging income taxes any more than it can stop the sun from shining or the world from turning.

What Airbnb can do is make the whole process a lot easier on hosts by accepting the burden. If its fees and commission have to go up a little bit to cover taxes, so be it - Airbnb seems perfectly willing to jump on that grenade. (Consider the letter that Airbnb sent around to hosts in San Francisco, claiming that the city was trying to collect taxes from hosts directly even after Airbnb itself paid those very same taxes.)

But the more paperwork that hosts have to fill out and the more local governments give them a hard time, the less likely they'll continue to list on Airbnb.

Short-term apartment rentals via places like Craigslist are harder to do, but less drama is less drama. And that's the last thing a growing startup like Airbnb wants hosts to think.

Airbnb is also trying to boost its legitimacy in New York, where short-term rentals of entire homes (as opposed to single rooms) is illegal for less than 30 days.

Here's the full text of Airbnb's letter:

Dear Members of the New York State Senate and Assembly,

As New York families finish their taxes, we write to once again renew our request to work with you to ensure the Airbnb community can contribute even more tax revenue to the State.

While other companies frequently attempt to avoid paying taxes, Airbnb has been working with governments around the world to help collect more tax revenue. We provide 1099 forms to help our hosts pay income taxes on the money they earn while sharing their space. We have also begun collecting and remitting hotel and tourist taxes in San Francisco, Portland, San Jose, Chicago, Washington, D.C., and Amsterdam and will expand this initiative to include other jurisdictions in the coming weeks and months.

We would like to implement a similar program in New York, but current State and New York City tax rules do not allow Airbnb to help collect and remit hotel and tourist taxes on behalf of our hosts and guests.

We were hopeful that New York State would address this matter in this year's budget. Unfortunately, one of the casualties of this year's budget negotiations was a provision governing taxes in online marketplace transactions that could have generated millions of dollars of vital revenue for New Yorkers.

The tax on electronic commerce would have required certain websites (or marketplace providers) to collect New York sales tax on sales made by remote sellers. It would have also enabled Airbnb to help collect and remit tens of millions of dollars in hotel and tourist taxes to the State of New York on behalf of our hosts and guests, the benefits of which would have been felt in every corner of our state.

We continue to urge State and City leaders to let our community contribute more tax revenue to New York. We urge members of the New York State Senate and Assembly to pass at least the portion of this legislation that would allow Airbnb to collect and remit taxes as quickly as possible.

Thank you for your consideration.

Sincerely,

David Hantman
Airbnb