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Are Taxing Times Ahead for Online Vacation Rental Sites?

by Vincent S. Loh
June 1, 2015

Vincent Loh's article, "Are Taxing Times Ahead for Online Vacation Rental Sites?" was published in Law360 on June 1, 2015.

From the article...

"In recent years, online vacation and short-term rental sites have made great inroads into the hospitality industry. Given their infancy and business model, however, they have gone largely unregulated, particularly when it comes to taxes.

The issue arises when one compares the classic hotel model with the new online model. Historically, the duty to collect and remit Transient Occupancy Taxes (tourist taxes) has been placed on the hotels themselves. In that regard, hotels are required to register with local governments so that their room rentals and taxes can be tracked and audited. Online models, however, have largely avoided these taxes since they serve merely as a broker (i.e., they take a cut from both the host and guest), leaving the tax duties to the host and guest. Given that the host and guest are typically not professional businesses, though, they often do not comply with local laws and, in turn, transient occupancy taxes are neither paid nor remitted."

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