Washington, D.C. March 2017 -- A new report outlining the dangers to states and municipalities of the tax agreements some have been entering into with lodging behemoth Airbnb has been released today, Tuesday, March 7th. Tax administration expert Dan R. Bucks, who was Executive Director of the Multistate Tax Commission and ran the Montana Dept. of Revenue authored the study.

In a conference call this afternoon, Bucks made the following statement:

“Having studied 12 of the 200 supposed ‘voluntary tax agreements’ Airbnb has entered into with states and localities - nearly all of which have been kept secret at Airbnb’s demand – it is clear they are actually not tax agreements at all, and they do nothing to insure the right amount of tax will be collected.”

“The agreements Airbnb is getting states and cities to sign do not require Airbnb to disclose all information relevant to its tax status, and they consciously shield with secrecy the identity and addresses of local lodging operators, or ‘hosts’ as Airbnb calls them. They do not contain actual tax information. In short, they do not do what normal tax agreements do.”

“So, what are these agreements? They are, in truth, rules that grant special privileges to Airbnb and its lodging operations. They are rules because they cover multiple decisions - not just tax issues - sprawling across a range of policy and administrative issues by:

• giving unjustified amnesty to Airbnb and its lodging operators,
• granting broad tax and regulatory benefits to a large class of unidentified beneficiaries—lodging operators—who are not signatories of the agreements,
• creating unusual and unprecedented limits on tax administration—especially audits and information sharing—that are a radical departure from normal practices and undermine the proper accountability for taxes collected, reported and paid,
• shielding in multiple layers of secrecy the identity and location of lodging operators to prevent the enforcement of tax and regulatory laws that affect public health and safety and the quality of community life, and
• restricting the public, the media and other agencies from knowing about and participating in the public policy decisions made in these agreements.”

“The Airbnb lodging most relevant are commercial-style facilities with one to several units where the operators do not live in them but rent them out full-time. This is not home-sharing. While home-sharing is often legal, commercial-style rentals more likely violate zoning or housing laws. Airbnb’s revenue growth is shifting toward commercial-style lodging, so hiding these facilities from public agencies to keep them from being shut down for zoning or housing violations benefits Airbnb’s revenues.”

“It is a myth that Airbnb employs a special business model deserving special treatment. Airbnb uses an old model, well-known in taxation. Airbnb is a retailer working with lodging operators - their ‘hosts’ - who are wholesalers delivering the final product to the consumer. For tax purposes, states have designed dual reporting with a coordinated, single payment system to fit this model. There is nothing new here that justifies these agreements with their special features.”

“The report analyzes the texts of 12 publicly released Airbnb agreements. There are reportedly 200 such agreements, most of which are being held secret for now. These 12 agreements do not contain anything confidential. Since Airbnb has sought similar agreements across the country, it is likely the bulk of the remaining agreements should also be released publicly.”

The report calls upon agencies to stop signing Airbnb’s deeply flawed agreements. The agreements provide unjustified and unprecedented favoritism for Airbnb and its lodging operators through a broad range of tax and regulatory handouts not available to other citizens and businesses. The gifts these agreements grant to Airbnb and its operators are unfair to other taxpayers, to lodging competitors and to citizens simply looking for a place to live.

“The agreements do not even guarantee that Airbnb’s lodging tax payments will be full and accurate. Airbnb gets to keep its books and records secret from tax agencies and provide only anonymous data for tax auditors—data that could be fact or fiction. These provisions insulate Airbnb from accountability for the taxes they pay. While there is no evidence of tax abuses—only a thorough, independent audit of books and records could determine that - and the agreements appear specifically designed to make audits impossible or as difficult as possible.

“As a final note, I would hope the press would consider independent action of its own to seek release of more of these agreements to the extent that they do not contain confidential information. We see no evidence that any of them appear to.”

Dan Bucks has served as Director of the Montana Department of Revenue (2005-2013) and as Executive Director of the Multistate Tax Commission (1988-2004). Prior to that he held executive positions in both Montana and South Dakota state governments back to 1971. He currently serves as a revenue policy and administration consultant and is a contributor to State Tax Notes. A copy of the report is available: https://www.ahla.com/sites/default/files/Airbnb_Tax_Agreement_Report_0.pdf

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