Nothing in life is so certain as death and taxes, says the old adage, and locals listing property on home-sharing sites such as Airbnb had their certainty in the latter reaffirmed last month.
Hosts received reminders from the Frankfort Tourism Commission that it was their responsibility to collect, report and deposit transient room tax on any rental paid for stays of less than 30 days.
That means ensuring the Kentucky Department of Revenue receives the state’s 6 percent sales tax and 1 percent transient room tax. In the Frankfort city limits, it also means collecting an additional 3 percent room tax, which goes toward funding the local tourism commission, and a 1 percent room tax to fund the now-demolished Frankfort Convention Center. In Franklin County, a similar 3 percent room tax applies, but there is no 1 percent tax for the convention center.
Responses to the tourism commission’s letters, dated Feb. 1 and March 12, have been mixed, said Robin Antenucci, director of the local tourism commission. While at least one of the 15 to 20 local hosts visited the tourism commission office in person for more information, others merely replied with their, perhaps, grudging thanks for the reminder.
For some, the effort has also revealed key differences in how Airbnb and competitors such as VRBO — part of Expedia-owned HomeAway — operate.
“At the 30,000-foot level they’re basically the same, but down in the weeds, there are some nuances in the way the taxes are handled,” said Rene True, who lists a downtown Frankfort vacation home on both Airbnb and VRBO.
At the state level, Airbnb reached an agreement with the Department of Revenue to begin automatically collecting and remitting Kentucky’s 6 percent sales tax and 1 percent transient room tax in October. Since then, Airbnb has remitted $700,000 in taxes to the Kentucky Department of Revenue, according to a spokesman for the site.
No such agreement yet exists for VRBO, meaning it falls on hosts like True to collect both state and local taxes — something True says he finds simpler anyway for accounting purposes.
In its most recent annual report, however, Expedia notes that a number of jurisdictions in the U.S. have filed lawsuits against its companies, including HomeAway, claiming that they have failed to collect or pay taxes.
Last year, Expedia settled a case brought by Kentucky for alleged violations of state sales tax laws, said the annual report, which also noted that any payments made to jurisdictions are “not an admission that we believe we are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously.”
On its website, HomeAway lists seven areas where it now automatically collects and remits taxes for hosts: Washington, D.C.; Puerto Rico; Broward County, Florida; Idaho; Los Angeles; and Oregon’s Portland and Multnomah County.
In an email, Department of Revenue spokesman Glenn Waldrop said the state has “ongoing efforts in place to bring various vacation rental portals into compliance,” but he declined to name HomeAway’s VRBO specifically. HomeAway did not respond to a request for comment on its business in Kentucky.
House Bill 383, introduced by state Rep. Diane St. Onge, R-Fort Wright, would have required travel sites to collect transient room taxes for local governments. The bill did not make it out of committee, according to the Legislative Research Commission’s website. St. Onge did not respond to a request for comment.
While the revenue generated by Airbnb and similar sites is still a tiny fraction of the over $500,000 per year in room taxes that Frankfort and Franklin County collect, Airbnb’s popularity continues to rise. Last year, Airbnb reported 1,250 “guest arrivals,” or trips per visitor, in Frankfort, an increase of 229 percent from the year before, The State Journal previously reported. In 2017, hosts in Frankfort pulled in $137,000, up from $43,439 in 2016. Statewide, Airbnb saw a 103 percent increase in guest arrivals to 166,000 last year.