Airbnb/VRBO hosts discuss hotel tax with city
Siloam Springs urges Airbnb and VRBO (Vacation Rentals By Owner) private landlords to pay a local hotel / motel tax in the future.
City Administrator Phillip Patterson and the city council sent a letter to Airbnb and VRBO vacation rental owners during Tuesday’s city government meeting. There are currently 15 private rental companies in the town of Siloam Springs, Patterson said.
The letter sent by Patterson states that a two percent hotel / motel tax, passed by the public in 1996, has not been paid by the owners and hosts of Airbnb and VRBO locations and will need to be collected and remitted to the city in the future.
The taxes listed in the city’s letter were a state tax of 6.5 percent, a sales tax of two percent, a district tax of one percent, and a hotel / motel tax of two percent, bringing the total to 11.5 percent, he said . Patterson said since the letter was mailed he has learned that there is also a two percent tourism tax in Arkansas, which increases the amount from 11.5 percent to 13.5 percent. A second letter was not sent with the updated total, he said.
Currently, Airbnb and VRBO pay the 6.5 percent state tax, two percent city sales tax, one percent county tax, and two percent Arkansas tourism tax, Patterson said. Neither Airbnb nor VRBO pay the two percent city hotel / motel tax.
The locations must also have a business license and a fire inspection according to the current city code. Depending on the zone in which the rental is located, a special usage permit is also required, the letter says.
There is no upfront fee to acquire a business license, and Patterson said in a subsequent telephone interview on Thursday that he would waive the $ 100 special permit fee for 30 days. If a private owner / host needed additional time, Patterson said he was willing to give the company an extension.
“I don’t want the $ 100 filing fee to stop anyone,” Patterson said.
Several private landlords and hosts showed up during the meeting and two people spoke up.
Dr. Rex Harris, who owns a small cottage across from City Hall and rents it through Airbnb, said he and the other owners spoke with Airbnb to find out the problem.
“We just need some clarification about what you get from Airbnb and VRBO and what is expected of us,” said Harris.
Melanie Chambers, a Remax realtor and the fiancée of Michael Cassels, one of the private landlords with properties in Fayetteville, Hot Springs, and Siloam Springs, found the letter confusing and wanted some clarification.
“Airbnb and VRBO collect (the taxes) and are supposed to bring them to you all,” Chambers said.
According to an online message from Lisa B (no last name given), a senior Airbnb support ambassador sent to Cassels on Tuesday, Airbnb has entered into a voluntary debt collection agreement and is legally required to collect and remit local taxes to the tax collectors begin in Fayetteville and Siloam Springs
However, when Airbnb was listing the tax amounts paid, the two percent hotel / motel tax for Siloam Springs was not included in the taxes levied for Siloam Springs, but for Cassels’ Fayetteville locations.
Airbnb’s Terms and Conditions also state that the host is ultimately responsible for determining and complying with applicable law tax obligations to report applicable VAT or other indirect taxes, occupancy taxes, tourist, income or other taxes to transfer or include.
The company collects taxes from owners / hosts, as in the communities and states they have agreements with, as detailed in Airbnb’s Terms and Conditions. Airbnb may request additional amounts from members if the taxes collected and remitted are insufficient to fully meet the member’s tax obligations, and the member agrees that the only remedy for a refund is through the tax authorities.
Airbnb customer support was contacted through their website and provided a list of cities that have agreements with Airbnb to collect usage taxes. A living person could not be reached for further clarification.
As of Friday, Airbnb signed contracts with 11 cities in Arkansas to collect hotel / motel or occupancy taxes: Batesville, Bella Vista, Bentonville, Eureka Springs, Fayetteville, Fort Smith, Hot Springs, Jonesboro, Little Rock, North Little Rock and Springdale to Airbnb help. If a city doesn’t have this agreement with Airbnb, the host is responsible for property tax, the terms state.
Patterson said the city tried to reach an agreement with Airbnb, but the rental company suspended its program of agreements with cities and told the city during its latest March 10 release that the program was on hiatus, Patterson said . Airbnb didn’t tell the city why the program was suspended.
VRBO told the city that in their contracts the host was required to transfer hotel / motel tax to the city, and VRBO could connect the city with VRBO’s political team to help the city host the VRBO get involved, said Patterson.
Cassels also contracted its property through VRBO, which turned to Cassels. The VRBO Help Center told Cassels that it needed a letter from the tax authority to show that an additional two percent tax must be levied during the booking process, the message said. The message failed to state whether VRBO would start collecting hotel / motel tax when the letter was delivered.
In accordance with VRBO’s tax collection guidelines, the company collects accommodation taxes from travelers in countries where VRBO is required by law or contract to do so.
In certain places and states where no agreement has been reached or there is no law to collect and remit certain taxes, the burden would be on the host. Currently, VRBO in Arkansas only collects the following taxes: Arkansas State Gross Income Tax, Local Sales and Use Taxes, and Arkansas State Tourism Tax.
City manager Lesa Rissler asked if the hosts need to install sprinkler systems when the firefighter comes out. Patterson said he suspected the owners and hosts would need a fire extinguisher and smoke alarm.
Patterson later said he spoke to Firefighter Dustin Kindell on Wednesday, who said if an inspection were to take place all that would be needed was a smoke alarm, fire extinguisher and carbon monoxide alarm if the site has a gas appliance. Patterson said he is trying to get rid of that inspection on the private rentals.
Rissler also asked if these companies should be allowed to operate until the process was completed. Patterson said the private rentals could continue operating until they received their licenses and permits.
Director David Allen said taxes were part of the process and when he traveled to different states he had to pay more than 20 percent for various taxes to stay in a hotel.
Allen also said Amazon has upset retailers and states need to pass online sales tax laws. Airbnb and VRBO have disrupted the entire hotel industry, and now states have to adjust to that.
“I think it’s just a normal process Phillip,” said Allen. “I think that’s part of life.”
The city directors have taken the following measures:
• Approved the workshop minutes for the May 4th workshop.
• Approved the minutes of the May 4th City Council meeting.
• Approved Resolution 17-21 to accept a grant of up to US $ 300,000 through the Arkansas Department of Transportation’s (ArDOT) State Aid City Street program for the milling and overlaying of Holly Street and University Street.
• Approved Resolution 18-21 regarding an application for an 80/20 grant from the ArDOT Transportation Alternatives Program for a 10-foot byway on North Mount Olive Street (Highway 43).
• Approved resolution 19-21 regarding an application for an 80/20 grant from ArDOT’s Recreational Trails program for the rehabilitation of the Dogwood Springs Trail around the La-Z-Boy baseball / softball complex.
Dedication of easements
• Approved easements inauguration for 606 and 612 N. Madison St.
• Update the board’s target for 2021-2022 regarding multicultural activities and events.
• Administrator report.