Important Clarification on Airbnb Agreements to Collect Taxes
Tuesday, June 13, 2017

Dear WH&LA Lodging Member:
 
A number of members contacted us following our recent Capitol Insider announcing the Airbnb agreement with the State of Wisconsin to collect and remit taxes on behalf of their hosts. Apparently, Airbnb had sent out a message to all of their Wisconsin hosts (which includes a number of our members) which added a mention that they are collecting "Basic Room Tax" as well, which gave a mixed message from their press release.
 
After reviewing the Airbnb communication, we agreed that it was confusing, so we contacted both the State Department of Revenue (DOR) and Airbnb to make sure which taxes they will collect and which they will not. The following is what we learned.
On July 1, 2017 Airbnb will begin collecting and remitting the following taxes on Wisconsin stays -  all taxes are based on the listing price including any cleaning fees, for rentals of 29 nights or less:
  • 5% State Sales Tax 
  • 0.5% County Sales Tax, in counties charging a county sales tax
                Special Taxes:
  • City of Milwaukee: 7% Local Exposition District room tax
  • Milwaukee County: 2.5% Local Exposition District room tax
  • Milwaukee, Ozaukee, Racine, Washington, and Waukesha Counties: 0.1% Baseball Stadium Tax
  • City of Rhinelander, Village of Stockholm, City of Eagle River, City of Bayfield: 0.5% Premier Resort Area Tax
  • City of Wisconsin Dells and Village of Lake Delton: 1.25% Premier Resort Area Tax
            Local (Municipal) Room Tax:
  • City of Madison: 9% local room tax will be collected and remitted to the City, due to a recent contract the City entered into with Airbnb
Important Note:
Airbnb is not going to collect any other local (Municipal) room tax unless the municipality enters into an individual agreement with them, which usually also includes a confidentiality clause that prevents the right of the municipality to audit which properties are renting rooms and for how many nights, which can make it difficult for municipalities to determine if homes/vacation properties/investment properties and other lodging properties are properly licensed, inspected, have permits, remit the proper amount of room tax, etc.
 
What does this mean?
  1. Each community will need to evaluate if they feel the potential extra room tax generated from unlicensed rentals is worth the unique secrecy right that will be given to Airbnb with an agreement. In order to find out if a host is licensed, etc. a municipality would either need to add staff to try to track listed properties (addresses are not visible on the site) or contract with one of the new and rapidly growing investigative companies providing  this service for fees.
  2. If their municipality enters into an individual agreement with Airbnb, licensed lodging properties utilizing Airbnb would need to differentiate these sales (where the tax would be collected and remitted through Airbnb) and their other lodging sales where the property must collect and remit room taxes on their own for that portion.
What to do if you want your municipality to pursue a room tax collection agreement with Airbnb?
 
Airbnb has advised that a municipality can contact their tax team direct at tax  agreements@airbnb.com. 
 
We hope that this overview is helpful to you as an exclusive WH&LA Lodging Member service, whether your property utilizes Airbnb or competes with Airbnb hosts, so that you know the facts.

Best,

Trisha

Trisha A. Pugal, CEA | President, CEO | Wisconsin Hotel & Lodging Association
1025 South Moorland Road - Suite 200, Brookfield, WI 53005
www.wisconsinlodging.org | 262-782-2851