Airbnb guests overpaying sales tax on short-term rentals in unincorporated Summit County
FRISCO — Founding Father Benjamin Franklin once wrote that nothing is certain “except death and taxes.” But if it’s a private company and not the government that’s doing the tax collection, how certain are we about those taxes? How do we know the company is charging the right amount of tax? And how do we know that the taxes the company collects will go to the right place?
These are questions being raised in Summit County about how Airbnb and possibly other short-term lodging companies are collecting and remitting taxes on behalf of the state and town governments.
A Summit Daily News investigation has found that guests for Airbnb properties in parts of unincorporated Summit County are overpaying taxes, bringing into question the tax collection and remittance arrangement between those companies and the state, and whether there is enough oversight.
Ross Quade, owner of a short-term rental property in the Dillon Valley East condominiums in unincorporated Summit County, recently raised the issue with the Summit Daily and county government. In an email, Quade claimed Airbnb guests booking his unit and other units in the Dillon Valley area in unincorporated Summit County were being charged sales and lodging taxes from the town of Dillon, which he called “theft and illegal.”
“This is amounting to higher costs to renters and vacationers in the hundreds and thousands of dollars of illegal remittances to local towns that are actually in unincorporated districts and not required to have guests pay these sales and lodging taxes,” Quade wrote.
Quade also pointed out language on the short-term rental FAQ page on the town of Dillon’s website that named specific areas that were not subject to town tax collection, even if they are in the same zip code as the town:
“The subdivisions of Dillon Valley, Keystone, Summerwood or Summit Cove are NOT in the Town of Dillon. They are in unincorporated Summit County and you should contact their offices for information regarding short term rentals.”
The arrangement for Airbnb to collect taxes on behalf of the town of Dillon began Jan. 1. The town website directs anyone who wants to verify the jurisdiction of their property to visit Summit County’s geographical information system mapping website at gis.summitcountyco.gov/map.
With a cursory survey of Airbnb listings and cross-referencing with the mapping tool, the Summit Daily found that every property selected at random for booking through Airbnb in Dillon Valley and the Peak 7 neighborhood near Breckenridge — both in unincorporated county territory — were charging Dillon and Breckenridge town taxes, respectively, along with the usual Summit County sales and housing authority taxes.
Those town taxes are not supposed to be collected for properties in unincorporated areas, meaning guests are being overtaxed.
Quade was concerned guests might balk at a property with the extra tax in favor of a cheaper property elsewhere. He gave an example of how a guest might opt to stay at a property in Keystone, where rentals appear to be taxed correctly, instead of a similar property in Dillon Valley, which has the extra town sales and lodging taxes attached.
It is unknown how many properties in Summit County are being erroneously taxed on online short-term rental platforms.
Summit County Finance Director Marty Ferris said she, too, was made aware of the problem earlier this week. Ferris said, unlike the towns, Summit County government does not have a direct line to Airbnb to resolve issues like this. The arrangement for Airbnb to collect and remit taxes on the state’s behalf, she said, was between the Colorado Department of Revenue and the company. She added that booking company VRBO also had made a similar agreement with the state and will start collecting taxes this year.
As a result of this arrangement, Ferris said, if anything needs to be corrected for proper tax collection of an individual property in Summit County, the property owner would need to flag it with the county, which would then contact the state, which would then contact Airbnb to rectify the erroneous taxation. It then would be up to Airbnb to fix the issue for that individual property.
Although the process is onerous, Ferris said it has to take place as Airbnb remits taxes back to the county and state in lump sums.
“Airbnb doesn’t remit by individual properties,” Ferris said. “They do it on a combined basis. If you get a lump-sum payment, you don’t know what taxes each property is being charged. The state is keeping a log, and so if we are given an address and short-term rental listing number, we can hand that to the state who can forward that to Airbnb to get corrected.”
Ferris said there is no apparent easy way on the state’s end, aside from conducting an official state audit, to verify whether individual properties are being taxed correctly or whether the proper amount of tax is being remitted to the state.
“I think it’s concerning,” Ferris said. “But I think it was the way the state could get Airbnb to play along and collect tax for them.”
A law change last year required online marketplace companies like Airbnb and Amazon to collect and remit sales taxes on behalf of the state and towns using the buyer’s address.
As far as trying to contact Airbnb directly to fix the issue, Quade said he had tried repeatedly to no avail.
“I have made repeated attempts to rectify their issue, and it’s frustrating,” Quade said. “They should clearly be able to look at the information I sent them and see these properties are not in local town districts. I don’t know how many thousands of dollars they collected from guests that they didn’t need to.”
In a statement provided to the Summit Daily on Friday evening, Airbnb said that any erroneous taxation for properties were honest geographical mistakes that they seek to rectify as soon as they are discovered:
“We’re working with hundreds of governments around the world to collect hotel taxes, and Airbnb has remitted $2 billion in tourist-related taxes to date. City and county boundaries aren’t always clear, and if we’re made aware that taxes were collected on a booking where it wasn’t applicable, we work to fix the issue.
“With every voluntary collection agreement, Airbnb takes on the liability for the complete and accurate collection of applicable taxes, and works in partnership with tax authorities to provide auditable data to substantiate the accuracy and completeness of Airbnb tax collection and remittance efforts.
Requests for comment from the Colorado Department of Revenue and town of Dillon were not returned as of publication.
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