erties on marketplace platforms. In many cases, the licenses required by these states are new, resulting in platforms being fined for their users lacking licenses they may not even know about. Regardless of the method used, this legislative trend shows no signs of letting up. Keeping up with the onslaught of legislation at the state level is taxing enough, but there are still more layers that are sure to leave short-term rental operators flummoxed. ACROSS CITYLINES Tax remittance isn’t the only front that short-term rentals are battling right now. Recently, cities across the U.S. have been passing local laws placing limits and other regulations upon short-term rent- als. One trending example of late has been “Good Neighbor Policies” – largely anti-party house legisla- tion. These local policies throw yet another wrench into standard com- pliance practices. Unlike the marketplace legisla- tion, which typically stays consistent at least within any given state, these local laws can vary from municipal- ity to municipality, placing the onus on owners and marketplaces alike, to ensure operations stay compliant across city lines. Examples of recent legislation against short-term rent- als at the city level include: SAN DIEGO California’s Short- Term Residential Occupancy ordinance, which limits short-term rentals to 1 percent of the city’s housing stock and creates a mandatory license for vacation rentals that limits owners to one rental property within the city. ATLANTA Georgia’s recent ordi- nance requires renters to acquire
permits, take responsibility for any violations on the property and collect the state’s hotel-motel tax. ATLANTIC CITY New Jersey’s ordinance requiring a similar permit to Atlanta while also defining specific areas within the city where short-term rentals can operate. Also of note, while hosts within Atlantic City will have taxes collected for them by rental platforms, hosts in the rest of New Jersey are responsible for collect- ing those taxes on their own. PLAYING CATCH-UP As regulations on short-term rentals grow in popularity at both the state and local levels, jurisdictions are trying to keep up with the field’s continuously evolving trends. It’s unrealistic to expect owners to keep up with these rapidly changing regulations on their own. Modern, cloud-based technology tools can pave the road for automated compli- ance, allowing hosts and business- es to focus on the quality of their operation rather than the newest ordinance or state law they might accidentally violate. Legislation and regulation in this field aren’t going to slow down any time soon. It’s up to hosts to make sure they’re taking compliance seriously and carefully navigating today’s increasingly complicated regulatory minefield. •
sometimes making it unclear wheth- er the laws apply to short-term rentals at all. Some states have tak- en a direct approach, first deployed by Massachusetts, that utilized a registry of rental units and requires all “rental intermediaries” (lodging marketplaces) to collect and remit occupancy tax. Others take more roundabout approaches, such as applying the South Dakota v. Wayfair ruling – chiefly concerned with taxing online marketplaces such as Amazon – to short-term lodging platforms by des- ignating them as “marketplace facili- tators.” Yet another method has been to change the definition of “innkeep - er” to also include outside facilitators of lodging services, hoisting respon- sibility for collecting hotel taxes onto Airbnb and similar platforms. Within this shifting legal land- scape, many states are placing the burden of enforcing unlicensed prop-
Pam Knudsen is Senior Director of Compliance at Avalara, leading the Lodging tax team and Returns Experience/Reconciliation team for Sales & Use. She serves as a leading voice in vacation rental tax compliance and regulation, in addition to bringing in-depth experience across software/SaaS technology as well as ERP systems. Pam joined Avalara in 2012.
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