Airbnb filed an appeal challenging Boulder, Colorado’s Municipal Court's decision to include its service fee in the city's Short-Term Rental Tax base. Additionally, Airbnb questioned the court's decision denying its penalties and interest abatement.
“... it is clear that the Guest Fee is not subject to Tax because it is a charge for the Airbnb Services and not for the leasing or rental of any dwelling unit.”
service fee taxability challenge
As generally known, Airbnb is an online platform that connects hosts and guests for short-term rentals. Hosts own and operate short-term accommodations listed on the platform. Accordingly, these type of rentals are subject to Boulder's Short-Term Rental Tax.
In 2016, Airbnb and the city entered into a Voluntary Collection Agreement wherein Airbnb agreed to collect and remit the Short-Term Rental Tax on behalf of hosts. The agreement aimed to make Airbnb a tax collector for short-term rentals on its platform.
On appeal from the Municipal Court decision that determined the service fee is part of the total price paid by the guest for leasing a dwelling unit, Airbnb asserts its service fee charged to guests is not subject to the short-term rental tax because its service fee is not for leasing a property directly.
Instead, Airbnb maintains the service fee is for ancillary services such as advertising and customer support. The company claims it is not a "lessor" or "renter" in disagreement with the court's interpretation of the ordinance. Additionally, Airbnb asserted it did provide sufficient grounds or evidence for its penalty and interest waiver request. The outcome of this challenge will have an impact on the taxability of short-term rental platforms’ charges beyond Boulder, Colorado and Airbnb.
tax guidance & assistance
For tailored insights or inquiries about navigating such tax complexities, we invite you to contact us for a complimentary consultation. Our team of specialists is ready to provide personalized guidance tailored to your business needs in the evolving landscape of short-term rental taxation.