TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Kacey Duncan, Deputy City Manager
SUBJECT:
title
Tax Collection Agreement with Airbnb
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
end
ISSUE:
The collection and remittance of Transient Occupancy Tax on booking transactions through the Airbnb platform.
RECOMMENDATION:
recommendation
Information Only.
body
SUMMARY AND BACKGROUND:
The City of Salem has entered into a Tax Collection Agreement with Airbnb (Attachment 1) wherein the collection and remittance of Transient Occupancy Tax for bookings on their platform will commence on April 1, 2018.
FACTS AND FINDINGS:
At the August 14, 2017 City Council meeting, Council amended Salem Revised Code (SRC) Chapter 37: Transient Occupancy Tax (TOT). The revisions added definitions for Booking Agent, Hosting Platform, Transient Lodging, Transient Lodging Facility, and Operator. These definitions were crafted to include platforms such as Airbnb. The intent of the revisions was to ensure that all transient lodgers within the city limits pay the TOT tax as required by the Salem Charter and the Code.
On September 5, 2017, correspondence was sent via email to all documented intermediaries and internet booking platforms informing them of the revisions to SRC 37, providing a copy of the Code, and informing them of a grace period through the end of September for coming into compliance with the Code.
In September, the accounting firm of Ernst and Young contacted the Finance Division on behalf of Airbnb to discuss the contents of the notice and the impact on their client. A meeting was set with Airbnb and then subsequently canceled. After an extended period of intermittent communications and no resolution, the City established a firm date for compliance by Airbnb. With the firm date in place, negotiations with a representative of Airbnb began in earnest. On March 16, 2018, a Tax Compliance Agreement was executed between Airbnb and the City wherein Airbnb will begin collection and remittance of TOT on behalf of their hosts on new booking transactions on April 1, 2018. The agreement preserves the City’s ability to audit, satisfies the TOT reporting requirements, and allows for fair and equal treatment for hotels and other lodging platforms under the Code. The City retained the ability to collect TOT from local operators for the period prior to the effective date of the agreement, and, so long as Airbnb is in compliance with the agreement, waived its right to seek TOT from Airbnb that may have been incurred prior to the effective date of the agreement.
A contributing factor in the negotiations was the passage of House Bill 4120 by the Oregon Legislature expanding the definition of an intermediary to include booking platforms such as Airbnb. The new State law will go into effect July 1, 2018.
Anthony Turley
Financial Reporting Manager
Attachments:
1. Tax Collection Agreement