Home-sharing company Airbnb plans to remit about $1.2 million in collected tax revenue to Arkansas, the company said Monday.
During its first year of a voluntary collection agreement, Airbnb charged guests three separate state taxes, the company said Monday in a news release.
Laura Spanjian, Airbnb's public policy director for Arkansas, called the agreement a "win-win" for local governments and the company's host community that includes more than 1,600 residences. Airbnb data shows the average host earned $4,600 last year from guest visits to the Natural State.
"We're glad Airbnb can help welcome a growing number of visitors to Arkansas, while generating new revenue for the state and creating an opportunity for hosts," Spanjian said in a statement.
Along with the base fee, Airbnb guests had to pay a 6.5 percent Arkansas gross receipts tax, a 2 percent Arkansas tourism tax, and a local sales and use tax. The agreement took effect Feb. 1, 2017. Before that, Airbnb's business model ruffled the feathers of hospitality industry competitors that collect state and local taxes.
Airbnb, one of the leading U.S. home-sharing services, allows almost anyone to lease out a room or rooms, usually at a cheaper rate than most hotels. Since it was founded in 2008, the home-sharing service has grown in popularity and -- at the same time -- taken criticism for creating a business model that sidestepped the taxes that commercial lodging businesses must collect.
Along with the state of Arkansas, Airbnb has tax agreements with the cities of Bentonville, Eureka Springs and Hot Springs. These agreements detail an additional tax for guests staying at Airbnb locations within those city limits. Tax revenue collected and remitted by Airbnb for those cities will be released later this year, a company spokesman said.
A tax agreement between Airbnb and Fayetteville took effect in February.
Paul Becker, chief financial officer for Fayetteville, noticed more people leasing homes to tourists in town for University of Arkansas events and October's Bikes, Blues and BBQ festival, which led the city to negotiate a separate deal with Airbnb.
"We saw it as a good way of recouping those revenues," Becker said.
Ann Armstrong, city clerk of Eureka Springs, said the home-sharing service helped the city spot "gaps" in hospitality and travel industry financing. For example, it's made it easier to collect taxes from out-of-state property owners, Armstrong said, something that's been "tricky" in years past because they are not state taxpayers.
"Overall, it's a beneficial thing," she said.
Asked to detail the factors led to the state's agreement with Airbnb, the Arkansas Department of Finance and Administration released the following statement:
"Due to the protection and privacy provided every taxpayer via the Tax Procedure Act, we are unable to discuss any details surrounding Airbnb's decision to collect taxes in Arkansas. However, we certainly appreciate this commitment as Airbnb is a company that plays a significant role in Arkansas tourism, a key component of the state's economy."
Steve Arrison, chief executive officer of Hot Springs' advertising and promotion division, said the agreements "level the playing" field for other hospitality and lodging businesses that have to keep things up to code.
So far Airbnb has collected and remitted more than $510 million in hotel and tourist taxes worldwide, the company said.
As home-sharing platforms like Airbnb and VRBO grow year-over-year with consumer confidence, Arrison said they have to be "having some sort of impact" on lodging property earnings.
"How great it is? That's anybody's guess."
Business on 04/03/2018
Print Headline: Airbnb to remit $1.2M to state; Sales tax receipts cover 12 months