Lancaster County rejects Airbnb voluntary tax collection agreement; critics seek level playing field

Airbnb's effort to enter into a tax remittance agreement with Lancaster County is being criticized as being unfair. 

The county treasurer's office said a voluntary collection agreement presented by the vacation rental website would allow the company to avoid the registration process all other hotels and bed-and-breakfasts must comply with.

The proposed contract, which the county refused to sign, said, "hosts shall be relieved of any obligation to collect and remit hotel tax on taxable booking transactions." It also said hosts "shall be permitted but not required to register individually with the Taxing Jurisdiction to collect, remit and/or report hotel tax."

County treasurer Amber Martin said those provisions would hinder the ability of officials to collect the county's 3.9-percent hotel room rental tax and the 1.1-percent hotel excise tax.

She said without being able to see booking information for hosts, it is hard to tell if the amount of tax being provided is accurate.

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"Not saying that they're going to be dishonest ... but we're not offering this to anyone else," Martin said. "(Other hospitality businesses) don't have that luxury, so why should we afford it to someone else?"

The Pennsylvania Department of Revenue entered into a voluntary collection agreement with Airbnb in 2016. Department spokesman Jeffrey Johnson said the contract is confidential, citing laws that prevent the agency from sharing "specific taxpayer information."

Martin said when she was initially approached by Airbnb with the contract, the company asked that it be kept confidential.

Seeking a level playing field 

"What these agreements from Airbnb say, I refer to it as 'hush money,'" Melissa Bova, vice president of government affairs with the Pennsylvania Restaurant and Lodging Association, said.

" 'We'll write you a check every month. We're not going to give you any information to prove that this is the correct amount.'

" 'We're not going to give you any information to show you who we're remitting on behalf of and you just leave us alone,' is essentially what these contracts say and it takes away any ability for the county to ensure that the correct amounts are being paid or for local governments to know where these places are located," Bova says.

She said she is not against competition, but she feels if Airbnbs are operating as de facto hotels, then they should be subject to the same regulations so that there is a level playing field.

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"It puts hotels that are remitting taxes at a disadvantage," she said.

Carl Kosko, inkeeper at Harvest Moon Bed & Breakfast in New Holland and president of the Authentic Bed and Breakfast Association of Lancaster County, said the problem goes much deeper than taxes.

"Make it so that everything is even all across," he said. "They don't have the operating costs that I have. They don't have to have a fire suppression system. They don't have to have egresses, two for each room. I had to spend the money to put that in. Airbnb properties just open their doors."

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Local Airbnb hosts

Elizabeth Sterner disagrees.

She said she doesn't think her Airbnb operation in Lancaster city rises to the same level as a traditional business.

"I was not aware that Airbnb units in people's homes were regulated to have to pay some kind of hotel tax," Sterner said. "I don't consider it a hotel."

However, she doesn't think people should be renting out whole buildings they don't live in through Airbnb, and she sees how people would view Airbnb's proposed contract as unfair.

From owning rental properties in other counties, she is aware of regulations governing short-term rentals and said she follows them in her Airbnb.

Claire Taylor, another Lancaster city Airbnb host, said she doesn't think Airbnb is going to ruin the hospitality business. She thinks the company occupies a separate niche in the market.

"The way I do it, it's a little more personal (than a bed-and-breakfast)," she said. "Bed-and-breakfasts are wonderful and they provide a service that a hotel might not just in being more home like, and I think Airbnb goes one step further."

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Tracking Airbnbs

The treasurer's office is trying to identify and register Airbnb properties in the county with the help of Discover Lancaster, which benefits from the hotel taxes, and local municipalities.

Airbnb.com shows 306 listings in Lancaster County, though some may be one location posting multiple rooms.

When the treasurer's office is made aware of suspected Airbnbs, it sends the hosts a letter notifying them they must register and comply with county ordinances. The office recently sent out 98 letters.

Sterner and Taylor have not received letters, but Sterner said she would continue to host guests even if she was forced to register.

"In fact my plan is now to get registered because now I know I have to," Sterner said. "I'm not averse to following the rules, it just seems like a nuisance."

Martin said most hosts often are unaware that they are in violation of county ordinances.

"We want to educate people the best we can to get them registered," she said.

So far, 119 properties in Lancaster County from Airbnb and similar services have been put on the tax roll.

Once they're on the tax roll, they must submit monthly reports regardless of whether or not they had any guests. The county also works to see how much back tax those hosts owe so it can request payment.

Because of the breadth of the issue, the county recently approved the creation of a new position which will directly deal with the remittance of the hotel tax and the onboarding of new properties. The position is partly funded by the hotel taxes.

Martin asked Airbnb to provide her with information on how much back taxes may be owed to the county, but so far she said she has not received that data.

Airbnb responds

Airbnb spokeswoman Liz Fusco said the company has entered into more than 350 voluntary collection agreements worldwide, including many in Pennsylvania.

"Airbnb is committed to collecting and remitting hotel taxes on behalf of our community," she said in an email to LNP. "Since 2016, we have collected and remitted $6.5 million to the Pennsylvania State government alone.

"We look forward to continuing to work with officials in Lancaster County to address any concerns they may have regarding our agreement," she wrote. "We hope to be able to ensure that our community can efficiently and effectively pay county hotel taxes in Pennsylvania.

"We believe that the Voluntary Collection Agreement eases the burden of hotel tax administration for the County while maintaining taxpayer compliance," Fusco wrote.

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Proposed legislation

In August, Carbon County Republican state Rep. Doyle Heffley introduced legislation which would change the way online short-term lodging companies are handled in Lancaster County.

House Bill 1810 would require online short-term lodging companies in Pennsylvania to register with the state and share information with taxing authorities including county treasurers.

These companies, also called vacation rental websites, are sites that connect people offering residences or rooms with potential renters who want them for short-term stays. Other than Airbnb, companies include VRBO and HomeAway.

"Competition on a level playing field is a good thing, but that competition must be fair to all players," Heffley said in a memo for his legislation.

The bill is co-sponsored by several lawmakers, including Lancaster County state representatives Keith Greiner and Brett Miller, both Republicans, and Democrat Mike Sturla.

Martin was scheduled to testify in support of the bill today before the state House Tourism Committee.