County is tracking down Airbnb hosts to make them pay taxes, but Airbnb says it will handle that now

county tracks down Airbnb hosts to make them pay taxes — but Airbnb says it’ll handle that now

Phil Cross thought it might help pay the electric bill when he decided two years ago to be an Airbnb host and rent out three extra bedrooms in his big, old Highland Park home to overnight guests.

He’s amazed, now, to gross almost $4,000 a month through Airbnb.

The rooms, which rent for between $35 to $50 a night, are almost always booked — at a price point that tends to attract younger guests.

“I had no earthly idea. I thought I’d rent a room and it’d help my pay my light bill,” Cross said.

One thing that sets Cross apart from many — if not most — Airbnb hosts in the Chattanooga area is that right from the start, he’s paid sales tax to the state and “bed tax” to the city and county.

“I pay my hotel-motel occupancy tax. I pay that every month.” Cross said. “I think everybody ought to do it according to the law. If you’re going to do it, do it right.”

The Hamilton County Trustee’s Office wants all Airbnb hosts to start paying taxes, and county officials have tracked down Airbnb hosts who aren’t paying by doing detective work online and through tips.

“Probably 75 percent of Airbnb hosts are not paying their taxes, I’m guess-

ing,” said Marlie Jones, the deputy clerk in the trustee’s office who collects occupancy tax for the city and county from hotels, motels, bed and breakfasts, Airbnb rentals and Vacation Rentals by Owner, a company that’s similar to Airbnb and predates it.

Over the past year, the trustee’s office has identified about 40 Airbnbs that weren’t paying taxes, Jones said. The trustee’s office sent each owner a letter that explains their tax obligations along with an occupancy tax form to fill out and return with a check.

Hamilton County Trustee Bill Hullender wishes that Airbnb would collect local and state taxes up front. That would make things easier, he said, for tax collectors and for Airbnb hosts. That also would make it fairer, Hullender said, since all Airbnb hosts would pay their taxes — not just those who came forward or were caught or got turned in.

“It would help if Airbnb actually did all the taxes on the front end,” Hullender said.

Airbnb plans to do that, company spokesman Benjamin Breit said.

“That’s exactly where we want to get to,” he said.

Airbnb handles the taxes for its hosts in about 340 jurisdictions, Breit said, and the company is committed to working out the same setup here in Chattanooga with the county trustee’s office.

“The hosts are happy because they don’t have to worry about these complicated taxes,” he said. “The local governments are happy.

“In pretty much every case, it has represented new revenues,” Breit added. “A lot of times you find hosts, they don’t even know the taxes exist.”

Also supportive is Olivia Karavatakis, one of the administrators of the Facebook page Chattanooga Airbnb that has 111 members and is private so they can discuss changes to local regulations regarding vacation rentals.

“Yes, Airbnb should collect these taxes,” Karavatakis said. “It would make life much easier for all parties.”

However, Karavatakis isn’t convinced that Chattanooga-area Airbnbs should pay the same tax rate as hotels and motels.

“Hosts (generally speaking) don’t mind that we have to pay taxes. We own a business and make money. We (mostly) understand that taxes are part of that game,” Karavatakis said via Facebook messaging. “The issue we have is that we are subjected to the same tax rate that large hotels and motels who turn a much larger profit than we do. They can afford the 17.6 percent tax. Small business “mom and pops” can’t.”

Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or www.facebook.com/ MeetsForBusiness or on Twitter @meetforbusiness or 423-757-6651.