Monday, April 22, 2019 by Chad Swiatecki

Tourism Commission asks Council to pursue hotel tax collection on STRs

The Tourism Commission wants City Council to revisit and possibly make changes to its ordinance covering short-term rentals, with the goal of increasing the amount of Hotel Occupancy Tax coming into city coffers.

The commission voted unanimously at this month’s meeting to ask Council to revisit its 2016 ordinance covering local STRs, specifically the mechanisms it provides for collecting taxes from properties advertised on platforms such as Airbnb and HomeAway. The resolution also asks staffers to conduct an analysis to determine how much uncaptured money is at play compared to what’s collected by the state, thanks to agreements that protect user information on listing platforms in exchange for turning over tax payments.

At issue is the city’s desire to have online platforms provide information on individual properties listed on the sites, which would help the city enforce its permitting and other regulations for the burgeoning industry.

The STR platforms have previously offered deals with the city that would have them pay hotel taxes owed while providing only anonymized and aggregated data. Those agreements also sought forgiveness of all previous uncollected taxes. The city rejected those offers.

“This is a very nuanced situation with lots of moving pieces,” chair Catlin Whitington said.

“While we can continue to ask staff and stakeholders in the conversation to come forward and bring more information in the future, perhaps a good way forward would be a recommendation to City Council to revisit collection of taxes for short-term rentals and at least do an analysis of what is the delta (the difference) between what is collected and what is out there as far as the market demand. That will be a starting point for us to see what’s on the table.”

The commission’s recommendation takes no position on limiting the amount or type of STRs that could operate in the city, though members seemed generally to agree that there needs to be some restraint on the number of non-owner-occupied STRs allowed in residential neighborhoods.

Some industry estimates say 20 percent of tourism bookings in Austin are handled by STR platforms with a significant portion of the business not paying into the city’s hotel tax, which grew by another 7 percent last year.

The request for Council action comes as the state Legislature is examining possible changes to state laws covering STR platforms.

Commissioner Scott Joslove, who is also president of the Texas Hotel and Lodging Association, said a law initially supported by Airbnb and lobbying groups for state Realtors that would have removed caps on the number of STRs allowed at the local level now appears unlikely to move forward. He said the most likely changes to the industry this session would be some clarification on the ability of cities to collect eligible taxes, and requiring listings to display the permit numbers issued by their city.

Joslove said the debate over the proliferation of STRs in cities has become linked to the tax liability issue, which is further clouded by the legal question of whether STR platforms are responsible for any portion of the taxes on transactions they facilitate.

“The will of the Council is to not have proliferation of STRs, and the only way Airbnb is willing to do a payment agreement unless compelled to by courts is to agree to unlimited proliferation, and agree to forgive all previous HOT that haven’t been remitted. Austin has been offered to get the taxes it’s owed but they haven’t agreed to those two conditions,” Joslove said.

“There’s a bit of awkwardness to both try to collect from entities that may be operating on platforms illegally based on Austin’s regulations, but we can’t determine that with anonymized reporting. That’s the circular issue, if you will.”

Photo by Carlos Pacheco made available through a Creative Commons license.

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Key Players & Topics In This Article

Hotel Occupancy Tax: A tax on the rental of a room in a hotel or other rental properties (including apartments) that cost 6 percent of the cost of a room.

short term rentals: Properties rented for fewer than 30 days.

Tourism Commission

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