Airbnb to begin collecting taxes for state Department of Revenue

Airbnb will collect state and local sales taxes from the 7,700 Tennesseans who rent their homes through the online company and send the money to the state Department of Revenue under an agreement reached Wednesday, reports The Tennessean. Currently, each individual Airbnb host is responsible for collecting and remitting the taxes.

The new process, which goes into effect March 1, will apply to collections from the 7 percent state sales tax and local option, which ranges from 1.5 percent to 2.75 percent depending on the local municipality.

Guests who use Airbnb will see a new line-item for the sales taxes when booking in Tennessee beginning in March.

For Tennesseans who rent out their homes via Airbnb, the agreement is considered a potential moneymaker because they will no longer need to build the tax rates into the price they charge.

Airbnb is billing the new arrangement as a step toward making the tax process “seamless and easy” for both Airbnb hosts and the state and as a way to generate more tax revenue.

More than $13 million in state and local tax revenue from Airbnb bookings over the last 12 month was due in Tennessee, according to the company. But not all of it was likely paid. The company claims the new agreement will ensure all revenue is collected.

…“Home sharing and short-term rentals are introducing a whole new world of travelers to the authenticity of Tennessee while offering new economic opportunities for thousands of middle class residents,” Laura Spanjian, Tennessee policy director for Airbnb, said in a statement. “We applaud the Haslam administration for its business-friendly approach to public policy.”