The company, which lets users rent space in apartments, homes, yurts, etc. sent a letter to Mayor Bill de Blasio this week suggesting that hosts pay the 15 percent lodging tax that typically applies to hotels, which amounts to at least $21 million a year.
CEO Brian Chesky has told regulators that he would be willing to let hosts pay the occupancy tax before. But this is the first time that the company has ever revealed "estimates on how much tax revenue its New York hosts might generate," reports The Wall Street Journal.
Six years later, New York has lost millions in potential tax dollars while Airbnb gained hundreds of millions in venture capital, with hundreds of millions more to come. But with a possibility of an IPO looming, Airbnb is getting proactive about what would end up in the "Risk Factors" section. A copy of the letter, obtained by Valleywag, woos de Blasio by suggesting the taxes could go toward his efforts to combat homelessness:
But what's even worse is that separate New York laws also prevent us from collecting taxes from our hosts and presenting that money to New York. We need to fix those laws now, so that no more time is wasted.
While many companies look for loopholes to avoid paying taxes, we want to work with leaders in New York to ensure that the Airbnb community pays its fair share. Over the next twelve months, we believe those taxes would easily reach the $21 million needed to pay for your rental assistance program. But we need help from you and other leaders in New York government to clarify and improve the tax laws now on the books so that we can legally collect and remit those taxes.
With your leadership and support, we can change these outdated and problematic laws. Airbnb hosts brought in more than $632 million to New York over a recent 12-month period alone, and changing the laws to allow for easier collection of taxes would just add to those benefits.
The company, which takes a 6 to 12 percent fee, isn't quite as saintly as their plea makes out. Airbnb is asking to change the law to let the company collect and remit from hosts, not volunteering to take it out of their own bottom line (lol capitalism). But either way, that 15 percent is going to get passed down to the renter.
What's more, this move comes as the hotel industry is putting pressure on Airbnb to uphold the same fire and safety standards they have to adhere to, notes The Wall Street Journal. Meanwhile, the taxing of multi-billion corporations had already occurred to local authorities in 2013:
[David Hantman, Airbnb's head of public policy] said Airbnb was also trying to tackle safety concerns by establishing a new requirement for all rentals to have smoke and carbon-monoxide detectors by year's end.
New York Attorney General Eric Schneiderman last year subpoenaed information on about 15,000 New York-area hosts to determine if any were paying hotel taxes. Airbnb filed a motion in state Supreme Court to block the subpoena, calling it unreasonably broad. The Albany court was supposed to hear arguments on the matter Thursday, but that hearing was postponed until April 22. Mr. Hantman said in a blog entry that the two sides are in discussions to reach an out-of-court agreement.
Airbnb isn't the only Silicon Valley startup conveniently cleaning up its act after a multi-billion valuation and global reach. Uber and Bitcoin are looking at lot less libertarian these days. But there's another snag in this peace offering, according to The Wall Street Journal:
Sam Himmelstein, a New York attorney who represents tenants, said that in some cases the tax could create additional documentation, making it easier for landlords to evict tenants who broke building rules. Most buildings require landlord permission before subletting.
New York is model city for the Airbnb's legal battles. Brace yourself, San Francisco.
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