Starting Aug. 1, Airbnb began collecting transient occupancy tax, or TOT, in Carlsbad.
After roughly six weeks of discussions, the city and the popular temporary lodging website came to the agreement for short-term vacation rentals in the city.
Cupertino, Redwood City, San Luis Obispo, Sunnyvale and San Bernardino and El Dorado counties all join Carlsbad as the newest cities to allow Airbnb to collect and remit TOT to those entities.
Carlsbad is just the second city in San Diego County to have a formal agreement with Airbnb. The city of San Diego entered into a contract in 2015, according to the company.
According to Cheryl Gerhardt, finance manager with the city of Carlsbad, the contract is in perpetuity until either the city or Airbnb cancels.
Matt Middlebrook, Airbnb’s public policy lead in California, said the agreements will eliminate the need for homeowners to navigate a complex process. Additionally, Airbnb will assume the legal responsibilities of collecting and remitting, he said.
“In 2015, we made it loud and clear that we wanted to work cities, states, counties and whoever collected the hotel tax … and work on behalf of our hosts,” Middlebrook said. “This is one more way we were able to engage with the communities and jurisdictions and local cities to benefit the cities to collect all the hotel taxes.”
In Carlsbad, the city TOT is 10 percent, along with a $1 per night fee, which is directed to the Carlsbad Tourism Business Improvement District.
Before the agreement, the city held homeowners liable for collecting and remitting the tax. However, homeowners who rented out units in July must still collect and remit taxes and pay those by the end of August to the city, Gerhardt added.
Airbnb’s contract, meanwhile, began Aug. 1 and it will collect taxes for August and submit those to the city by the end of September.
Gerhardt said over the past several years it has been difficult for homeowners to play tax collector. The city only allows short-term vacation rentals, which is defined as a unit rented for less than 30 days, in the Coastal Zone.
Gerhardt said she is in discussion with other online booking agencies about similar agreements.
“This kind of gets the TOT on the front end and we are ensured we get the money,” she said, noting some homeowners have struggled with the necessary paperwork and complexity of remitting the tax. “Airbnb is leading the charge and I think it’s a matter of time before some of the other ones enter into similar agreements.”
In total, Airbnb has more than 400 tax agreements worldwide remitting more than $700 million in taxes. Middlebrook said 340 of those agreements are in the U.S., which has accounted for $600 million.
As for California, it is the most popular destination for Airbnb’s users, with more than 7 million people visiting the state through Airbnb last year. In total, Airbnb has 45 agreements with cities and counties throughout the state.
“Sales tax and hotel tax are the most direct source of revenue for most cities in California,” Middlebrook added. “We worked very hard with jurisdictions to strike these, we have more jurisdictions coming to us to figure out how we can do more of these agreements.”