Airbnb collected around $6,750 a month in taxes on its Blacksburg bookings after signing an agreement to help the town better enforce its homestay rules, according to data released by the company.
All Airbnb-style home rentals in Blacksburg have been subject to lodging taxes for years, but collecting what amounts to a small amount of money from hundreds of hosts — many of which do not publicly identify themselves — has proven challenging.
Blacksburg asked Airbnb for help last year, and became the second locality in Virginia to sign a tax collection agreement with the California-based technology giant.
Now, Airbnb adds the 7 percent tax onto customers’ bills when they pay online. The company collects the taxes on behalf of its hosts, and then turns the money over to the town.
From Aug. 1 to Nov. 30 in 2018, which represents the height of Blacksburg’s tourism season around Virginia Tech football, Airbnb said it collected and remitted a total of $27,000 in taxes to the town.
For comparison, Blacksburg collected $13,400 on all homestay rentals including Airbnb and its competitors from July 1 to Nov. 30 in 2017, according to statistics provided by Blacksburg Town Attorney Larry Spencer. With the help of Airbnb the following year, the town collected $32,800 over the same period in 2018, a bump of more than 100 percent.
Other jurisdictions have balked at the terms because Airbnb requires the localities it works with to forfeit many of their auditing powers.
The company’s standard tax collection agreement stipulates that localities won’t receive a list of addresses where the rooms are booked or names of the taxpayers — basic information the government typically checks to ensure taxes are being assessed properly.
Industry groups, including Commissioners of the Revenue Association of Virginia and the Virginia Municipal League, have criticized the practice. They say Airbnb is asking localities to accept tax revenue from unknown taxpayers, all while taking the company’s word for it that the proper amounts are being remitted.
Blacksburg Mayor Leslie Hager-Smith wrote in an email that the town is giving the tax collection agreement a trial run. She addressed the transparency debate, but pointed out that it doesn’t cost the town anything to experiment.
Based on the increase over previous years, Hager-Smith added that the town believes Airbnb is assessing taxes properly.
“I’d say it’s been successful to date, but of course, we only have one year behind us,” she wrote. “As always, we’ll go forward with open minds and a focus on getting the best metrics we can.”
Hager-Smith also said the tax collection agreement has helped accomplished the goal of bringing “basic fairness” to the town’s lodging tax collection.
“The homeowners who decide to Airbnb their rooms are engaging in a commercial venture,” the mayor wrote. “This arrangement has helped to even the playing field for hoteliers and the operators of traditional bed and breakfasts.”