You have to hand it to Startupland. Where else could a company figure out its tax obligations only after the market says it's worth $10 billion? An even better trick is chanting "sharing" all the way to an IPO.
After six years in business, Airbnb has decided to "legitimize itself" by "agreeing" to have hosts in San Francisco pay the city's 14 percent hotel tax by this summer, reports The Chronicle. It's the kind of legitimacy that even $326 million in venture capital and soon $400 million to $500 million more can't buy (and won't have to pay for) since the bill is being sent to its hosts.
According to the Chronicle, tax records displaying how often San Francisco hosts rented out their apartment could impact rising eviction rates:
Collecting the tax "might satisfy the city, but it won't satisfy landlords," said Marina Franco, an attorney at Wasserman Stern, who represents property owners [...]
"Our concerns are the liabilities of having strangers in our buildings, the fact that (tenants) are renting rooms for more than landlords are entitled to charge and that they don't have conditional use permits to run hotels," Franco said.
Airbnb wants to anonymize the names of hosts, but it's unclear whether they will be able to:
"It will be fuzzy since we are all flying under the radar of zoning laws prohibiting short-term leases," said the host, who declined to be identified. "They would be collecting money for these short-term stays, but hopefully hide where these patrons are staying."
Last week, Airbnb tried a similar approach in New York. The company touted a potential $21 million tax windfall, if only the city would let the nice sharing economy collect and remit taxes from hosts. But Attorney General Eric Schneiderman took Airbnb to the state supreme court to determine taxes, so New York has not yet acquiesced.
Portland, on the other hand, has embraced Airbnb, even adopting the company's jargon. In a post on Medium this week, CEO Brian Chesky announced that Portland would become Airbnb's first "Shared City." That means that Airbnb will:
-"Make it easy" for Portland hosts to donate to local causes and will match donations with a percentage of its fees
-Make free smoke detectors and carbon monoxide detectors available
-Collect and remit taxes for Portland hosts
-Market Portland and its small businesses
-Work with Portland's Bureau of Emergency Management to help hosts respond to crisis
-Weed out "corporate property managers who abuse our platform, hurt the city's housing stock and give guests a bad experience," although it's unclear whether you have to do all three simultaneously to get booted off the site.
If enforced, it's a vast improvement on what most startups contribute to a community. Then again, Airbnb has six years of lost tax revenue to atone for and billions at stake in looming IPO.
In the announcement, Chesky traced back the roots of the sharing economy to an ancient urban tradition:
Cities are the original sharing platforms. They formed at ancient crossroads of trade, and grew through collaboration and sharing resources.
His observations were published under Medium's "Life Learning" section.
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[Image via Getty]