State DOR reaches tax agreement with Airbnb

The state Department of Revenue has reached a tax agreement with Airbnb, which will now collect occupancy taxes from people who use its app to rent out rooms or homes on a short-term basis.

The company, which says it has 3,300 active hosts in Wisconsin, says the agreement would result in at least hundreds of thousands of dollars to the state.

Airbnb has faced regulatory battles around the world with municipalities and the hotel industry, which says Airbnb doesn’t follow typical safety regulations and generally does not collect taxes.

Airbnb says it’s now partnered with more than 250 jurisdictions to collect taxes. That includes the city of Madison, which as of last month began letting Airbnb collect its room tax.

Under the deal, Airbnb would automatically collect the state sales tax, the county sales and use tax and three sets of taxes collected in some parts of the state: the Baseball Stadium District tax in southeastern Wisconsin, the local exposition tax in Milwaukee and the premier resort area taxes in places like Eagle River and Wisconsin Dells.

But that doesn’t include collections for the Wisconsin municipalities aside from Madison that charge a room tax. DOR said it is not involved in the collection of local room taxes.

Airbnb says room tax collections are individual agreements it needs to hammer out with municipalities, as it did with Madison.

Trisha Pugal, the president and CEO of the Wisconsin Hotel and Lodging Association, said Airbnb not collecting taxes puts its members at a disadvantage because Airbnb hosts can charge lower prices to their customers.

But she said she’s glad Airbnb negotiated the deal with the state.

“This is a positive step that they’re taking,” she said. “It isn’t all the way there yet, but it is a positive step.”

Airbnb said in a statement the agreement with DOR, which is effective July 1, will let Wisconsin “fully capitalize on more people visiting Wisconsin and staying longer through home sharing.”

Ben Breit, a spokesman for Airbnb Midwest, said the company is in talks with Wisconsin municipalities, particularly Green Bay, to set up a room tax agreement similar to Madison’s.

He said the statewide announcement will “hopefully trigger some really productive” conversations with more municipalities, adding that no community is too small and that the company will have a big presence at the United States Conference of Mayors this month.

“Being good partners to local governments really matters to us,” he said.

The company said it had 105,000 guest arrivals to Wisconsin last year, a 164 percent increase from 2015. Airbnb hosts in Wisconsin earned $13 million last year through the app.

DOR said it can’t comment on “specific taxpayer information without taxpayer permission,” but that Airbnb gave the agency permission to share revenue estimates. The agency said the estimates amount of sales tax collections in 2016 were $700,000.

See the release:

–By Polo Rocha