Cities to Airbnb, ‘Pay Up!’

April 30, 2020

By Gwin Hall, Senior Associate General Counsel, GMA

Even in the best economic times, cities and counties in Georgia look for ways to pinch pennies—and collect more of them—to pay for services their businesses and citizens expect. Given the limits state law puts on local revenue sources, finding new money can be difficult. Sometimes, the best way to find “new” money is to make sure your city is collecting all it can from existing revenue sources.

The cities of Rome, Cartersville and Tybee Island, along with Hart County, did just that, and included all other cities and counties in Georgia in their effort. On Jan. 31, they initiated a class action lawsuit, City of Rome, Georgia, et. al., v. Airbnb, Inc. and Airbnb Payments, Inc., in the United States District Court for the Northern District of Georgia, against Airbnb, claiming Airbnb is required to remit hotel-motel taxes to cities and counties in Georgia but is not doing so. According to the lawsuit, in 48 other states, Airbnb forwards hotel-motel taxes to the appropriate local government but does not do this in Georgia.

Many cities and counties in Georgia charge hotel-motel taxes (also known as “occupancy taxes”) on short-term lodging. The hotel-motel tax rate in Georgia can range from three percent to eight percent, depending on how the revenue will be used and how the tax is enacted. At least some of the tax revenue is usually spent to promote tourism, trade shows and conventions, but some of it can be used for general fund purposes, like paying for basic government services.

The lawsuit alleged that Airbnb collects hotel-motel taxes from renters for lodging in Georgia but does not pay those hotel-motel taxes over to the city or county where the rental property is located. The lawsuit also claimed that Airbnb owes Georgia cities and counties this occupancy tax regardless of whether Airbnb collects these taxes from the renter. In short, the taxes are owed, and Airbnb is responsible for paying them, but so far the company has not.

The lawsuit did not speculate how much hotel-tax revenue Airbnb owes cities and counties in Georgia. The amount an individual city or county could recover depends on factors like its hotel-motel tax rate and rental fees for Airbnb properties in that city or county.

The Georgia General Assembly is considering House Bill 448, which would remove any argument that Airbnb does not have to collect and remit hotel-motel taxes in Georgia. Out of respect for the legislative process, the lead local governments in the lawsuit asked the court to dismiss their lawsuit, understanding they can file it again if the legislation does not pass.

This article appears in the March/April 2020 edition of Georgia’s Cities Magazine.

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