lodging tax

Airbnb will soon collect and remit Arizona lodging taxes for hosts.

Arizona Governor Doug Ducey and Airbnb have announced “a partnership to streamline the home sharing economy.” Beginning January 1, 2017, Airbnb will collect tax on behalf of its Arizona hosts. It will also electronically file returns and remit state and local transaction privilege taxes to the appropriate government entities.

In his press release, Gov. Ducey highlighted the agreement’s benefits to both hosts and the state. Hosts win by increasing compliance while avoiding complex tax returns. The state wins by maximizing tax revenue and sparing the Arizona Department of Revenue “the cost of manually processing hundreds, if not thousands, of paper returns on a monthly basis.” Other home share companies are invited to make a similar arrangement with the state.

The governor has been a vocal advocate for the home share economy. Last spring, he signed into law Senate Bill 1350, which prohibits counties and municipalities from banning short-term rentals such as those advertised on HomeAway and Airbnb. Short-term rental proponent Matt Kiessling of the Travel Techonology Association called that bill a “win for everyone,” as “it ensures that short-term rentals remain an option for travelers to Arizona and provides enormous economic benefits to local communities, while streamlining the collection of tax revenue” (Techcrunch).

Tax compliance

Airbnb will collect and remit the following taxes on Arizona bookings:

  • Arizona transaction privilege tax (TPT): 5.5% of the listing price for reservations of 29 nights or less, including cleaning fees
  • County excise tax: the rate varies by county, normally 0.28%–5% of the listing price for reservations of 29 nights or less, including cleaning fees
  • Local transient occupancy taxes: these vary by locality, typically 1.5%–0% of the listing price for reservations of 29 nights or less, including cleaning fees, and may include one or more of the following:
    • TPT
    • Transient lodging tax
    • Bed tax
    • Hotel-Motel tax

The home share giant has been striving to create agreements with states and localities for some time now. It’s been collecting applicable taxes in Phoenix since July 2015, and recently announced that it will collect tax on behalf of hosts in New Orleans, Louisiana, as of January 1, 2017.

Tax automation software facilitates lodging tax compliance for individuals and the hotel industry. Learn more.