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EXCLUSIVE: Airbnb is not paying a required lodging tax in Arlington County

Published November 22, 2021 at 3:50PM

Airbnb logo on a former office space in Clarendon (file photo)

Airbnb is the only major homestay platform not paying a tax levied on third-party lodging providers in Arlington County, ARLnow has learned exclusively.

On Sept. 1, a new Virginia law went into effect requiring businesses that facilitate homestay transactions to collect and pay a locality’s Transient Occupancy Tax (TOT). Previously, individual hosts collected the tax.

Taxes under the new system were due on Oct. 20, and so far, Airbnb — the platform with an outsized share of Arlington’s short-term rentals — has yet to comply. Homestay platform Vacation Rental By Owner (VRBO), by contrast, appears to be complying.

“As of now, Airbnb is the only major homestay platform operator that has not complied with the new state law,” Susan Anderson, the communications director for the Office of the Commissioner of Revenue, tells ARLnow. “We are aware that other localities are also experiencing the same issue.”

Arlington has 840 active homestay rentals listed on either Airbnb and VRBO, and Airbnb listings comprise 82% of rentals, with another 10% listed on both platforms, according to short-term rental data company AirDNA. That means the county could be losing out on significant tax income each month.

The tax comes out to 8.25%, including a 5% county TOT, a 0.25% local tourism TOT and the state’s 3% regional TOT.

Active Airbnb and VRBO rentals (via Airdna)

Anderson said the office cannot disclose how much Airbnb owes due to a state law that prohibits the release of such information about individual taxpayers. However, we are told the office continues to assess Airbnb for the tax each month and is working to bring the lodging company into compliance.

A back-and-forth between county tax collectors and Airbnb appears to have been going on since at least Oct. 11, when the county notified Airbnb of its obligations in writing, per a copy of the letter obtained by ARLnow.

“The Commissioner of Revenue’s legal counsel has advised the company of its obligations and staff continues to follow up to ensure compliance,” Anderson said.

The Commissioner of Revenue has the power to determine how much should have been collected and can assess Airbnb for owed taxes, said William J. Burgess, the deputy commissioner and legal counsel for the Office of the Commissioner of Revenue.

The Arlington County Treasurer’s Office, meanwhile, “has the power and responsibility to collect payment of delinquent amounts,” he added.

Airbnb claims it hasn’t paid the TOT tax yet because of “ambiguity” in the state law. The company says it does not have the authority to collect this tax and has just started having conversations aimed at reaching a “technical solution” allowing it to collect this tax.

“Airbnb believes in helping our community pay taxes, and we have been collecting and remitting Virginia state sales tax on behalf of our Hosts since 2019, like we do in thousands of jurisdictions around the world,” said Laura Rillos, an Airbnb spokeswoman. “Unfortunately, as written, SB 1398 does not legally authorize Airbnb to collect and remit local transient occupancy taxes.”

“We are committed to working with lawmakers and stakeholders to find a technical solution so that all platform businesses have a basis to collect under the law,” Rillos continued. “We remain committed to working with communities and stakeholders across Virginia to support tourism recovery and help deliver these important tourism dollars.”

One local host who has been following this issue closely, reaching out to the county and Del. Patrick Hope (D-47) to see what is being done to get Airbnb in compliance, told ARLnow that the county could be getting shortchanged by hundreds of thousands of dollars.

“Airbnb was actually not collecting TOT from my guests, or guests in Arlington in general, as the company should have been,” said Diane Page, who has been letting out a suite attached to her Arlington Forest house since 2017. “I knew this because I saw my guest invoices, and when I randomly looked at other private (not corporate) Airbnb listings in Arlington, saw that Airbnb was not charging TOT.”

Using AirDNA data, Page estimates that the county could be missing out on more than $100,000 a month in taxes from Airbnb.

(more…)

Arlington adjusts hotel tax calculation to target online brokers

By David Taube

Published October 21, 2021 at 10:10AM

Beds in the Renaissance and Residence Inn hotels in Crystal City (staff photo)

The Arlington County Board has tweaked an existing lodging tax, making sure it covers the entire bill.

The Board passed the measure Saturday, which means the existing 5.25% tax affecting hotels and other lodging will also now apply to any accommodation fees charged by intermediaries, such as Airbnb and online booking sites.

“Before, transient occupancy taxes were collected and remitted… by hotels and other lodging providers based on the amount of the room charge paid by the guest,” county spokesperson Cara O’Donnell said in an email.

Last year the state legislature updated the law authorizing a Transient Occupancy Tax, which is paid by lodging customers, allowing localities like Arlington to make the change. It also requires that a portion of proceeds be sent to the Virginia Tourism Authority.

For Arlington County’s tax, just under 5% of the money collected will go to promote tourism and business travel in Arlington.

The update also suggests that intermediaries, such as online companies, will have to collect and send the tax to the government.

It wasn’t immediately clear whether that means Airbnb hosts with smaller rental setups will no longer have to file monthly tax reports.

JUST IN: Airbnb Cancelling D.C. Area Reservations Next Week

By ARLnow.com

Published January 13, 2021 at 10:10AM

Airbnb says it is cancelling bookings for next week in the D.C. area, in response to threats of violence during the Inauguration week.

Following the pro-Trump storming of the U.S. Capitol last week, there have been reports that armed groups are planning protests around the Inauguration, raising the specter of more potential violence.

Airbnb says the cancellations will help ensure that its local hosts are not hosting those planning to disrupt next Wednesday’s ceremony.

“Airbnb will cancel reservations in the Washington, D.C. metro area during the Inauguration week,” the company said this morning.” Additionally, we will prevent any new reservations in the Washington, D.C. area from being booked during that time by blocking such reservations.”

“Guests whose reservations are canceled will be refunded in full,” Airbnb wrote. “We also will reimburse hosts, at Airbnb’s expense, the money they would have earned from these cancelled reservations. HotelTonight reservations also will be canceled.”

Morning Notes

By ARLnow.com

Published September 10, 2018 at 8:35AM

Parking Changes Among Child Care Proposals — Changing onerous parking requirements for child care centers is going to be “on the list of proposed ordinance changes we’re introducing” at a community meeting next Monday, according to a tweet from Arlington County Board Chair Katie Cristol. [Twitter]

Smoke the Dog Dies — “Smoke, the Arlington, Virginia, dog with a bucket list, died this week, the Animal Welfare League of Arlington announced Friday. In July, Smoke captured a lot of hearts in the area when the Arlington shelter announced that he had terminal cancer and that they’d created a bucket list for him.” [WTOP]

Letter: Arlington Lacks Airbnb Enforcement — A letter to the editor argues that Arlington County has been ineffective in enforcement of a short-term rental ordinance passed in 2016. Per the letter: “Short-term rental industry websites showed more than 1,000 units advertised for short-term rent in Arlington as of early July, but only 72 residents had obtained permits, down from 86 in January.” [Washington Post]

Dems Make Money Via Mail — The top fundraising activity for the Arlington County Democratic Committee: sending hand-addressed and hand-stamped letters. [InsideNova]

Tree Falls on Chain Bridge Road — Chain Bridge Road was closed Sunday after a tree fell and took down utility lines, for at least the second time this year. The stretch of Chain Bridge Road in Arlington that was closed is home to the most expensive house in the D.C. area. [Twitter]

Photo courtesy Jeremy Galliani

Bed and Breakfast Plan Denied for ‘Pershing Manor’ Mansion

By Chris Teale

Published September 18, 2017 at 3:30PM

3120 N. Pershing Drive (screenshot via Zillow)

The Arlington County Board nixed a plan for a huge Lyon Park mansion to be used as a bed and breakfast at its meeting Saturday (September 16).

On a 3-2 vote, the Board denied a proposal for the home at 3120 N. Pershing Drive to operate as a bed and breakfast with at most five guest rooms, with some of those to operate as suites using more than one bedroom. The 13,700-square-foot house contains nine bedrooms, and would have been the county’s first bed and breakfast.

Board member John Vihstadt joined chair Jay Fisette and vice chair Katie Cristol in voting against the plan. Christian Dorsey and Libby Garvey voted for it.

“One of the bottom lines here for me is you have an exceptionally large house… and now it has the potential to provide exceptionally large disruption depending upon what the Board does and either way, how it is managed in the neighborhood,” County Board chair Jay Fisette said.

But the door is still open for property owners Yogi and Daisy Dumera to have their home as a short-term Airbnb rental, which has laxer rules on operation.

Under the Airbnb regulations, a total of six people could stay in the home at one time, or two per bedroom, whichever is most. An Airbnb rental does not require any off-street parking, unlike a bed and breakfast, and would only be inspected by code enforcement after a complaint.

Garvey said given the stricter enforcement on operating bed and breakfasts, she was inclined to support the plan as it could protect the neighborhood more.

“I think, in the long run, it’ll be better for the neighborhood to have more controls and regulations to stay within the parameters of that neighborhood to make it a B&B,” she said. “If we don’t make it a bed and breakfast, I suspect it’ll go the Airbnb route and make things more difficult for the neighborhood.”

The bed and breakfast plan came in for criticism at the Board’s meeting during public testimony. Local resident Harlan Hadley bemoaned the home’s potential conversion into a “quasi-commercial business,” especially because of traffic impacts.

And in a letter to the Board, the Lyon Park Citizens Association said allowing a business in a home would damage the residential neighborhood and possibly encourage similar uses from others.

“Residents opposed the conversion of a residential property in the heart of a residential area into a commercial site,” the association’s executive committee wrote. “The Association believes that this could set a deleterious precedent and could lead to many more sites being developed and reclassified in ways that would erode the quality of our neighborhood.”

The plan followed Dumera’s efforts to sell the house for several years. Records show he dropped the asking price well under the property’s $4 million assessed value, but took the home off the market after not finding a buyer. The property was criticized by neighbors for its ostentatiousness when it was built a decade ago.

Fisette said the bed and breakfast plan appeared to be a “last effort” by the owners to recoup their investment after being unsuccessful in their efforts to sell or auction the house.

Photo No. 1 via Zillow

Morning Notes

By ARLnow.com

Published September 1, 2017 at 9:15AM

It’s September — As if to emphasize that today is the start of September and the first day of meteorological autumn, mother nature has dialed up a crisp start to the morning and a cool day overall in the D.C. area. [Twitter, NOAA]

Arlington Seeing Airbnb Tax Revenue — The recently-implemented enforcement of the transient occupancy tax on Airbnb-style rentals in Arlington County is producing revenue: nearly $18,000 through July. County tax enforcers think taxes on Airbnb and other short-term rentals may eventually bring in $250,000-$1.5 million per year. [InsideNova]

HS Football Kicks Off — The high school football season has kicked off for Arlington’s high schools. Wakefield defeated Washington-Lee 37-27 last night at the Generals’ home turf. The game was attended by a number of Arlington Public Schools officials, including Superintendent Dr. Patrick Murphy. Also Thursday night, Yorktown defeated D.C.’s Wilson High School 20-14. Arlington-based private high school Bishop O’Connell lost its season opener. [Twitter, Twitter, InsideNova, InsideNova]

Flickr pool photo by John Sonderman

Morning Notes

By ARLnow.com

Published February 22, 2017 at 9:30AM

Airbnb Reg Changes Proposed — The Arlington County Board is considering more updates to its new Airbnb regulations. The Board on Saturday is expected to advertise two potential changes: first, eliminate the loophole that allowed Airbnb hosts to get out of paying hotel taxes if they host fewer than four guests at a time. Second, set a $60 annual fee for the permits required to be an Airbnb (or VRBO, HomeAway, etc.) host in Arlington. [Arlington County, Arlington County]

Letter: Short-Term Rentals Pose Risks — A pair of letter to the editor writers in the Sun Gazette argue that allowing Airbnb and other short-term rental services in Arlington involves major risks to safety and the potential for abuse of affordable housing. [InsideNova]

Meeting to Discuss Proposed VRE Fare Hike — A meeting will be held March 7 in Crystal City to discuss a proposed 3 percent fare hike for Virginia Railway Express. [WTOP]

FBR to Be Acquired — Rosslyn-based investment bank FBR is being acquired by Los Angeles-based B. Riley Financial Inc. for $160.1 million in cash and stock. FBR’s chairman and chief executive will become CEO of the combined company. [InvestmentNews, Washington Business Journal]

Wakefield B-Ball Teams Advance — The Wakefield Warriors boys and girls basketball teams have clinched state tournament berths. [InsideNova]

Flickr pool photo by Erinn Shirley

Morning Notes

By ARLnow.com

Published January 30, 2017 at 9:15AM | Updated January 16, 2018 at 2:30PM

Va. Officials on Immigration Order — President Donald Trump’s executive order barring those from seven Muslim nations from entering the U.S. has caught the ire of Arlington’s Democratic congressional representatives and state officials. Sen. Tim Kaine said that he was “appalled by the cruelty” of the order, Kaine and Sen. Mark Warner have “demanded answers” from the Dept. of Homeland Security, Gov. Terry McAuliffe is “outraged and disappointed,” and Rep. Don Beyer joined four other local congressmen at Dulles International Airport to try to speak to Customs and Border Protection officials who were detaining a number of travelers.

County Board Changes Airbnb Regs — Renters will now no longer be barred by the county from renting their home on Airbnb and other online services. The Arlington County Board approved the change to their recent-passed ordinance unanimously at its Saturday meeting. [Arlington County]

Bill: No Food = No Liquor — A bill that has passed the Virginia state senate would prohibit restaurants from serving liquor while the kitchen is closed and no longer serving food. The bill clarifies a 1971 law that was intended to do the same but was “interpreted liberally by some.” [Style Weekly]

County Acquires Land for Fire Station Project — The Arlington County Board has approved the $800,000 purchase of a home on N. Culpeper Street for the construction of a new, expanded Fire Station No. 8. The property is the final acquisition necessary to build a temporary fire station for use while the new station is constructed. [Arlington County]

County Board to Consider Allowing Renters to Host Airbnb Guests

By ARLnow.com

Published January 17, 2017 at 10:30AM

As of Jan. 1, those listing their homes on Airbnb, HomeAway, VRBO and other such services have a new set of Arlington County regulations to follow.

That followed the fast-tracked County Board approval of the regulations on Dec. 12, beating the state legislature — which is considering a more lax set of policies that could supercede local rules — to the punch.

With the rules now in place, however, the Arlington County Board is looking to make some changes. Chief among them is allowing renters, not just homeowners, to generate extra income by opening their home to short-term guests.

Advantaging those who own a home over those who rent was criticized by some as regressive, and at its Jan. 28 meeting the Board appears poised to respond. (As part of the legislative process, such changes must first be “advertised” to the public, and the Board did so in December while approving the original regulations.)

In a Board report, county staff said limiting Airbnb privileges to homeowners was an idea gleaned from other jurisdictions — an idea that staff came to realize would face significant pushback.

“Throughout the public outreach process, staff heard from renters with an interest in hosting accessory homestay, including the majority of participants at a public open house, and from several advisory groups and commissions, including the Housing Commission, and from several participants in an online feedback form,” staff wrote. “Staff concluded that it would be appropriate to broaden the proposed amendment to allow accessory homestay in all dwellings occupied by a resident who uses the dwelling as his/her primary residence, regardless of ownership status.”

The change would not, however, automatically mean that any renter could turn their apartment into a de facto hotel: the renter or homeowner must still use the home as their primary residence for at least 185 days out of the year, and landlords could still prevent tenants from taking in short-term renters.

“Even if the proposed amendment is adopted to allow tenants to host accessory homestay, a lease could still preclude (or further limit) a resident from using his/her home for accessory homestay purposes, and any enforcement of lease terms would be between the tenant and landlord,” staff wrote.

Other changes being considered this month include allowing hosts to rent out rooms to multiple short-term “roommates” on separate contracts, and making several “updates for clarity and consistency.”

The Arlington Planning Commission is scheduled to take up the changes at its meeting tonight before the Board votes on it later this month.

Morning Notes

By ARLnow.com

Published January 9, 2017 at 8:45AM | Updated January 9, 2017 at 10:26AM

Beyer Warns of Obamacare Repeal Ramifications — “The Republican plan to repeal the Affordable Care Act will have disastrous consequences for Virginia,” Rep. Don Beyer (D-Va.) said Friday, citing recent studies. “Hundreds of thousands of our neighbors will lose life-saving, affordable health coverage. The state also stands to lose as many as 100,000 jobs, $30 billion in gross state product, and $50 billion in business output. This is unacceptable and irresponsible.” [House of Representatives, Commonwealth Fund]

Will Startup’s Growth Add Arlington Jobs? — Just before the new year, president-elect Donald Trump said that Rosslyn-based OneWeb will be creating 3,000 jobs as it prepares to launch hundreds of satellites to deliver broadband internet around the world. Will those jobs be coming to Arlington? An Arlington Economic Development spokeswoman said the agency was not sure, while a OneWeb spokesman told ARLnow.com only that it was opening a new office in McLean.

Op-Ed Warns ‘Ignore Arlington’s Bad Example’ — The Arlington County Board’s recently-passed home sharing regulations are a “bad example” for other Virginia localities considering similar rules, since Arlington prohibited renters from renting their homes on Airbnb and other platforms. “The opportunities created by the sharing economy shouldn’t be restricted to only those few who are deemed worthy,” says a fellow with the Mercatus Center at George Mason University, in an op-ed. [Richmond Times Dispatch]

County Board Members Take Regional Roles — “Arlington County Board Chair Jay Fisette will serve as 2017 Vice Chair of the Metropolitan Washington Council of Governments National Capital Region Transportation Planning Board. County Board Vice Chair Katie Cristol will serve as chair of the Northern Virginian Transportation Commission’s Legislative Committee, and has joined the leadership of the Virginia Railway Express Operations Board.” [Arlington County]

New Year, New Offer for New Advertisers — Join dozens of satisfied advertising clients and get your business’ message out to the greater Arlington community with ARLnow.com. Learn more about our advertising options and check out our new winter deal for new advertisers: book at least a month of advertising and get another month free. [ARLnow]

Want to Rent Your Place on Airbnb? Get Ready to File Monthly Tax Returns

By ARLnow.com

Published December 15, 2016 at 11:35AM

This past weekend, the Arlington County Board approved new regulations on Airbnb and other short-term home rentals.

The move was cheered by Airbnb, which said Arlington is now the “first D.C. area municipality to pass an ordinance creating fair rules for middle class residents and families to continue sharing their homes.”

The regulation officially makes Airbnb legal in Arlington, whereas it might have been technically illegal before, under the local zoning ordinance. But there was one issue not addressed by the county press release that Airbnb hosts will want to consider going forward: taxes.

ARLnow.com did some more digging and it turns out that Airbnb hosts (along with those using services like Homeaway, Craigslist, etc.) will have to pay the same 7.25 percent Transient Occupency Tax as hotels. And they’ll have to pay it in the same way — by creating an account with the county and filing monthly tax returns.

That’s a burden that may discourage casual hosts from, say, just renting their place for the inauguration, assuming they want to stay on the right side of the law.

“The Commissioner of Revenue will require each person renting property to transients, including those who obtain an accessory use permit for short term homestays under the new County ordinance, to collect and remit the TOT to the County,” Ray Warren, Arlington’s Deputy Commissioner of Revenue, tells ARLnow.com.

“This is done and will be done the same way as it is with every other entity providing transient accommodations,” Warren said. “We will set up an account for the accommodation provider. They must file each month by the 20th for the previous month’s activity.”

What if a homeowner did not rent his or her property in a given month?

“They should file monthly, but it is easy (especially online) to file a zero return,” Warren said. “Otherwise we don’t know if they had no business or merely neglected to file.”

So monthly tax returns will be the norm for anyone renting their place on Airbnb. If the homeowner decides to stop renting for the foreseeable future, they can notify the Commissioner of Revenue’s office and stop filing.

“It would not be proper, however, for the homeowner to again advertise the property for rent without opening a TOT account,” noted Warren.

Because Airbnb does not publicly list the addresses of rental properties, Warren said that compliance will primarily be accomplished through tips. Another compliance mechanism: checking the tax records of those who have applied for the new “accessory homestay” permit.

“We have made efforts this year, but we depend on tips and voluntary compliance,” he said. “To the extent there are those who do not comply with the County’s new ordinance (and get an accessory use permit) we will continue to rely on tips from the public.”

“Homestay rentals, unlike other public businesses, do not generally have signage or other markers, so that can be difficult otherwise,” Warren added. “We will also be reviewing individual (state) income tax returns to look for persons reporting such rental income. I suspect that bringing the vast majority into compliance through the County ordinance will also increase the number of leads as to non-compliant locations.”

County Board member John Vihstadt, the lone “no” vote on the short-term rental ordinance, said had “some serious reservations” about it and thought the process was “too rushed” and left “issues inadequately addressed.”

Contacted by ARLnow.com two days after the vote, he said he was not sure how taxes would be collected on Airbnb properties.

“That is something, frankly, that is not clear,” he said. “We need to make this easy for the hosts and guests.”