Who’s paying the Hotel Tax
With the upswing of short-term rentals — particularly through online platforms such as Airbnb — the question of whether they are subject to the hotel tax in the state has surfaced.
Enacted by a state ordinance in 2000, the hotel tax is a 5 percent tax on those who stay in a lodging property. It is collected just like a sales tax.
“It is transacted on any stay at a property not exceeding 30 days,” according to Jason Fink, president and CEO of the Williamsport/Lycoming Chamber of Commerce. Fink added that could be one night or any number up to 30 days. Once they get over 30 days, it’s considered a permanent residence.
“The state defines a lodging as a bed and breakfast or homestead, cabin, hotel, motels, inns and it is transacted on any stay at a property not exceeding 30 days,” Fink said.
Each county in the commonwealth collects the tax and Airbnbs and Vrbos have been subject to the tax since 2019.
“Tioga, Potter, and Clinton counties have a greater occupancy of the Vrbo and Airbnb type of properties because they don’t have as many hotel rooms,” Fink noted.
Monies collected by the counties goes to the designated tourism promotion agency in each county. Of the 5 percent tax, the counties retain 4 percent for administrative costs with the remaining 96 percent going to the tourism agency to be used for promotion and marketing and various tourism projects.
“One of the things that has become very frustrating for not only Clinton County, but counties across the state of Pennsylvania is that the facilities and the properties that are on Airbnb and are on those sites and are rented through those sites…they collect that tax for the property owner,” said Clinton County Commissioner Angela Harding.
The money collected by those platforms is then sent in a lump sum quarterly to the counties where the properties are located, Harding explained.
“I don’t want to say it’s a problem, because we are very thankful that Airbnb sends us the tax and does what they need to do,” Harding said.
“What they don’t do is send us any kind of a detailed report. So we basically are just getting a check with no accountability…we’re not getting any kind of detail on where they got their numbers. Why the check is this amount,” she said.
Because the online platforms collect the tax and then remit it to the county, there is actually no accounting for which short-term rentals have paid the tax and which have not.
“Whenever the internet started collecting tax on items, I believe that’s when the Airbnb and Vrbo’s groups started collecting and remitting,” Fink said.
“They have their own mechanism to monitor who not only hosts but those who use the properties. I’m not that familiar with them. That’s a transactional item that’s between the business and the individuals who both use them to rent properties and those who choose to stay at the properties,” he said.
Harding said that the problem is that her county wants to find out where the properties are so that there can be a two-way communication and collaboration between the county’s tourism promotion and the short-term rentals.
“It’s kind of difficult because then we’re trying to discover new properties and have conversations with those property owners about hey, thank you so much for opening an Airbnb. This is great. We want to promote our tourism. We want more people to come to our community and enjoy the beauty,” Harding said.
By having these properties fill out a form with the county identifying who they are, the county would be able to deduct the amount that the property owner has paid in hotel taxes through the platform. There would be more accountability.
Harding admitted that, although she does not want to give the perception of anyone being dishonest, she detailed a scenario where someone contacts a short-term rental property owner online saying they’d like to book for a certain time and the owner says they should text them to work out the details.
“He is booking the property on his own calendar. He is removing it from being available on that Airbnb weekend that shows online and now that tax is being missed,” she explained.
“These things are happening. If Airbnb could even give us a detailed report. That’s not a county issue. That’s a state issue,” she said.
Harding said that she has even done an internet search of short-term rentals in Clinton County and then compared the results from a spreadsheet in the tax office to see if they correspond.
“There seems to be a lot more on an internet search than there are on our spreadsheet,” she said.
“But, again, several of those that are on those platforms I talked about could very well be and are paying the tax through Airbnb or Homeaway or another one of those platforms and we just don’t have them on our spreadsheet because they’ve never registered with us and registering with us is not required,” Harding said.
“If I could give them a message, it would only behoove you to let us know that you exist and let us know that you’re going through one of these platforms…It would really be advantageous to them to communicate with our tourism department so that they can kind of be in the loop and market themselves,” she added.