L.A. to warn Airbnb hosts to start paying hotel-type taxes

Renting out rooms in L.A. using Airbnb, VRBO or similar websites? Tax warnings could be on the way

If you’re renting out rooms through Airbnb.com or similar websites in Los Angeles, you could soon get an online warning urging you to collect and pay city taxes aimed at hotels.

City officials were told Monday to start sending such warnings to anyone advertising Los Angeles rentals through such websites as a City Council committee focused on the budget mulled how to reap money from popular services that allow hosts to rent rooms to travelers for short stays.

Under city regulations, people renting out rooms through Airbnb or other such websites can face the same kind of taxes levied on hotels, which must collect taxes from guests on behalf of the city. But so far, pinning down the addresses of people renting out rooms has been “like looking for a needle in a haystack,” said Ed Cabrera, assistant director of the city’s office of finance.

Cabrera said that in the past, such websites made it easier to find the exact addresses of hosts. Now, “it’s become harder for our office to identify these businesses,” he told the committee.

In response, Councilman Bob Blumenfield said finance officials should send out warnings about the taxes to hosts through the websites themselves, which allow users to contact hosts before booking rooms. The rest of the committee agreed and directed the finance office to start sending such messages online.

“It might very well be that a lot of these folks are just not aware that they even have the obligation to pay,” said Councilman Paul Krekorian, adding that the city needs to move quickly to start collecting the taxes.

By sending out the warnings, he said, “it puts them all on notice.”

In a statement Monday, Airbnb spokesman Nick Papas said customers who sign up with the service are already alerted to local laws.

"When hosts register on Airbnb, they agree to comply with local rules, including tax laws, before they list their space," Papas said. "We also have a hosting responsibilities page that includes L.A.-specific information and resources. Home-sharing helps countless hosts pay their bills and make ends meet and we look forward to continuing to work with leaders in Southern California and around the world."

The growing popularity of Airbnb, Vacation Rentals by Owner and other such websites have posed challenges for cities that lure tourists, as the “sharing economy” collides with city codes crafted for traditional hotels.

Malibu lawmakers decided to crack down on such rentals earlier this year, voting to issue subpoenas to dozens of websites to make sure taxes were being collected for short-term leases. In San Francisco, critics have complained that such rentals are whittling down the housing supply.

Los Angeles Councilman Mike Bonin said that similar worries have arisen in Venice, where owners are “buying entire apartment buildings, evicting everyone … and making it all Airbnb,” he said Monday.

At the Monday meeting, Assistant City Atty. Beverly Cook said that under existing city codes, Los Angeles cannot require Airbnb and similar companies to collect hotel taxes, though the property owners themselves are legally required to do so. 

Krekorian, however, is interested in striking voluntary agreements with Airbnb and its competitors under which the websites would help collect the taxes.

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