Post by High Priestess on Feb 1, 2016 2:44:14 GMT
See this post on the Airbnb COmmunity Center:
community.airbnb.com/t5/General-Hosting/Pennsylvania-State-Hotel-BACK-Taxes/m-p/19984#U19984
Carrie shared Jan 2016:
Pennsylvania State Hotel BACK Taxes
Got the below letter from the State's Department of Revenue last week.
I'd been paying income tax all along, and my city (Philadelphia) recently passed regulations requiring those of us who do short term rentals to pay the City's hotel tax, which Airbnb has recently begun collecting on behalf of hosts. The letter states that I owe back taxes for the State's Hotel tax, going back to 2013.
I wrote to Customer Service seeking guidance, and was pretty much referred to the terms of condition that state that hosts are solely responsible for obeying local laws, regulations, and for paying taxes. I absolutely want to pay whatever taxes I owe/operate within the law, but this seems excessive.
So, I now have to pay city and state hotel tax on top of income tax. I think taxes are now approaching 50% of income. Not to mention $2-3,000 in back taxes for renting out my one spare bedroom.
Curt
So from your note you mention that both the state (Penn) and city have a hotel tax.
First I would read (should be available on line) the actual law or ordinance and verify whether renting a room in an owner occupied home is covered in the definitions.
How does the State know what you made and how did they come up with a figure? From your income tax or 1099 supplied by airbnb?
In my state, even though I received a 1099 I did not fall under rental income. Make sure your situation meets a definition of reportable income. Curt
Carrie:
Airbnb is currently collecting the Philadelphia City Hotel Tax from guests, at booking, on behalf of hosts - they started doing so in October of 2015. Good idea to find the State ordinance & to read that.
The letter I posted above did not specify any particular figure. Did my photos come through? I don't know how the state got information that I've been rending my room, but the 1099 seems a logical answer. That, and I have declared the Airbnb income, and provided a copy of the 1099 on my City, State and Federal income taxes over the last three years.
Curt
Hi Carrie
From:
Pennsylvania hotel occupancy lodging tax
www.pacode.com/secure/data/061/chapter38/chap38toc.html
Chapter 38 Hotel Occupancy Tax
Hotel—A building in which the public may, for a consideration, obtain sleeping accommodations, including establishments such as inns, motels, tourist homes, tourist houses or courts, lodging houses, rooming houses, summer camps, apartment hotels, resort lodges and cabins and other building or group of buildings in which sleeping accommodations are available to the public for periods of time less than 30 days.
Curt’s comments, “ need to determine definitions of above terms to see if you are a “hotel” as defined above.”
From article 7-22-2014 www.wearecentralpa.com/news/zoning-board-rules-against-tourist-homes
STATE COLLEGE, CENTRE COUNTY - A decision has been made on a controversial zoning issue in a Centre County borough.
The State College Zoning Hearing Board decided the way two borough homes were being used were in fact for "tourist home" purposes and say it won't be permitted.
The two homes at question are zoned as R-2 residential properties, meaning they are specifically designed to be a single-family home in a residential zoned neighborhood, but these two properties are being used for what the borough and neighbors are calling "tourist homes."
"It takes away from the neighborliness of the neighborhood," Janet Engeman said.
Engeman is pleased with the Zoning Hearing Board's decision Tuesday.
"This is what I was hoping would take place," she said. "I live just a couple doors away from those properties and we've been aware of the problem for quite some time."
She, other neighbors and the zoning board said 612 Walnut Street and 138 West Prospect Avenue are being advertised as vacation homes. They're often rented out on a short-term basis for special event weekends, especially during Penn State's football season.
Neighbors said not having consistent residents in the homes goes against code and is making their neighborhood less neighbor-friendly.
Now, the borough said this type of transient housing isn't allowed.
"The critical matter here was that the two owners were not occupying those two homes," Stanford Lembeck, Chairman of the Zoning Hearing Board, said. "They live some place else."
Pennsylvania definitions:
20.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Boarding house—A building or portion of a building occupied for human habitation in which five or more persons, not related to the proprietor or manager, are furnished with meals and lodging.
Lodging house—A building or portion thereof in which five or more persons, not related to the proprietor or manager, are furnished with sleeping accommodations and shall include rooming houses, bachelor apartments, dormitories, barracks, bunk houses and other kinds of buildings used to furnish sleeping accommodations.
Curt’s comments: “so you are not a boarding or lodging house unless 5 or more persons were staying there.
Rooming houses: There seems to be no definition in the above PA law so:
www.planning.org/pas/at60/report105.htm
AMERICAN SOCIETY OF PLANNING OFFICIALS
1313 EAST 60TH STREET — CHICAGO 37 ILLINOIS
Information Report No. 105
December 1957
Rooming Houses
A Problem of Definition
Hundreds of zoning ordinances have loopholes that permit group living arrangements. In most of these cases, potential difficulties are caused by unsatisfactory definitions. It is always nice, of course, to have at least a general idea what an ordinance is talking about when it uses a particular term. But technicalities are particularly important in this field. Sloppy definitions enable the promoters of unwanted group living arrangements to claim that it is some other use that is on the permitted list. Unhappy neighbors have occasionally unexpectedly been forced to adjust to 40 or 50 fraternity brothers living together in a one-family zone.
Three important distinguishing characteristics of group living quarters are laid down in the zoning ordinance of Bismarck, North Dakota (1953):
The occupants are [or at least may be] unrelated;
Separate cooking facilities are not provided for individuals or groups of individuals;
Persons residing in the building are domiciled more or less permanently, in contrast to the transient residents characteristic of hotels . . .
Curt’s comments “so you do not seem to be a “lodging houses” “.
I am not sure what your redress is but you seem to not fit the definition of hotel as long as you occupy a portion of the house and have had 5 or fewer guests at a time. I would politely tell them to pound sand. I am not a lawyer but would suggest you send a polite letter to the State and say that you do not fit their definition of hotel. You simply occasionally rent a room in your house that has not been modified in any way to change the single family characteristics and that you did pay income tax on the Airbnb activity and see what comes next. For the form I would check off $0 as hotel income send the form and the letter back to them.
Regards, Curt and good luck
Curt
Hi Carrie,
More thoughts on this. Suggest you simply send the form back in that you owe $0 dollars and maybe a very short letter that you are not a "hotel" as defined by Pennsylvania law. Don't add all the stuff that I sent you as to why you are not a hotel. But...... put them on the point of proving that you are a hotel. Put them on the defensive and make them do the work to prove that you are a "hotel" which I feel you are not. This process could take many months. Don't panic. Hang in there. Again I am not a lawyer but do you have a lawyer friend that may know something about real estate law to contact. In my legal activity with Michigan tax litigation I have an action that affects my taxes that I am fighting and will win but it takes time. Just relax for a bit and fight this. At worst it will be an additional interest penalty but at best you will owe nothing.
Regards, Curt
Carrie
Thank you so much, Curt. Your information was very helpful, and probably not something I would have found on my own. Much gratitute!
Carrie
Jumping back in here to provide a follow up.
I talked to a lawyer, who, unfortunately said that the state's definitions are so broad as to be almost meaningless. He also said that fighting this would be a long, time consuming process.
I also talked to my accountant who is trying to get a handle on things on his end.
I also called Airbnb's San Francisco # & was told my case would be forwarded to the tax department. I send the CS agent a copy of the above State letter. After close to a week, I got this response from Airbnb. (hmmm. I thought I could insert an image into the response, but the camera icon doesn't seem to be working properly. I'll copy & paste)
Grrr. Can't copy & paste either! Urrrggg. As if this weren't annoying enough!
Here's what the Airbnb Tax Department responded with:
***
Carrie,
We are filing one tax return per jurisdiction, with the total combined reservation revenue. This means that all hosts located in Florida will be represented by one remitted amount, and we will not be providing your personal information on the return. We're dedicated to keeping your personal information private - if at any point we're required to share any information with your local government, you'll be specifically notified.
Hosts may view the amount of occupancy tax paid by guests in the Gross Earnings section of their Transaction History, and can confirm which juristictions are being accounted for from Manage Listing>Location, underneath the Adress section.
This can also serve as documentation of said taxes being collected, paid for and remitted on your behalf.
In 2016, Airbnb plans on getting more detailed CSV for our hosts that include a detailed account of tax amounts.
Let me know if I can continue to support.
Evan
I see very little way that his email actually related to my situation. Am I missing something? Does this make any sense???
Steve
Welcome to the club. Imho, its AirBnb's job not mine to collect and remit any required taxes not let the home owners find out years later that they owe back taxes. In my case, several thousand dollars. Thanks for contacting the Penna Dept of Revenue with my information, Air BNB, you RATS! I have just unlisted my two AirBNB listings. it is not worth the huge hassle to have to get get a Business licence as a hotel operator (really - my spare bedroom?), pay quarterly taxes to State and City, collect and remit monthly hotel occupancy taxes. No thanks. AirBNB you can take this "sharing economy" business of yours and stuff it where the sun don't shine.
Carrie
I got a response from Airbnb saying that they did not share information... so I don't know if the State went through the 1099's or if they have an "investigator" on staff that found out. It's really frustrating. And the response from Airbnb (other than to say that the State did not get the information from them) was to tell me how to go through my account to get the information (# of nights occupency & income earned) in order to report it.
Scott & Ed
HI Carrie,
I am in the same situation as you are, I have recieved the same letter. I simply filled out the form provided, i used the account number on my 1099 for first section and put in parenthesis see next page, in which i copied a few pages from my reservations and the occupancy tax that was collected.
I then filled out the rest of the form truthfull with how long my listing has been up and revenue I made.
I supplied my phone number and sent this in a few weeks back. I haven't heard from them, so not sure what the next step is there.
I did file for an LLC for my airbnb listings to separate my indivual income from the airbnb earnings.
Let me know if you would like to discuss furhte rat our next airbnb monthly meetup!
www.meetup.com/Philly-Airbnb-Meetup/
Rich
I can see why Airbnb is not eager to jump in and tell you whether you owe these taxes or not, or offer an interpretation of Pennsylvania law that could get them in trouble.
I also received this letter and looked up the same PA code. Without commenting on whether either of us run a "hotel" it seems that as written, if you have a building where the public can pay to stay for periods under 30 days, then you have a "hotel" as the law defines it.
Carrie
Yeah, I get that. What I'm still not completely sure about is which taxes Airbnb is collecting. The letter says there's a 1% city hotel tax, and my understanding is that Airbnb was to begin collecting city, but not state taxes. But Airbnb is collecting a lot more than 1% in taxes. So, how do I (and my accountant) know which taxes to pay? Do you know?
community.airbnb.com/t5/General-Hosting/Pennsylvania-State-Hotel-BACK-Taxes/m-p/19984#U19984
Carrie shared Jan 2016:
Pennsylvania State Hotel BACK Taxes
Got the below letter from the State's Department of Revenue last week.
I'd been paying income tax all along, and my city (Philadelphia) recently passed regulations requiring those of us who do short term rentals to pay the City's hotel tax, which Airbnb has recently begun collecting on behalf of hosts. The letter states that I owe back taxes for the State's Hotel tax, going back to 2013.
I wrote to Customer Service seeking guidance, and was pretty much referred to the terms of condition that state that hosts are solely responsible for obeying local laws, regulations, and for paying taxes. I absolutely want to pay whatever taxes I owe/operate within the law, but this seems excessive.
So, I now have to pay city and state hotel tax on top of income tax. I think taxes are now approaching 50% of income. Not to mention $2-3,000 in back taxes for renting out my one spare bedroom.
Curt
So from your note you mention that both the state (Penn) and city have a hotel tax.
First I would read (should be available on line) the actual law or ordinance and verify whether renting a room in an owner occupied home is covered in the definitions.
How does the State know what you made and how did they come up with a figure? From your income tax or 1099 supplied by airbnb?
In my state, even though I received a 1099 I did not fall under rental income. Make sure your situation meets a definition of reportable income. Curt
Carrie:
Airbnb is currently collecting the Philadelphia City Hotel Tax from guests, at booking, on behalf of hosts - they started doing so in October of 2015. Good idea to find the State ordinance & to read that.
The letter I posted above did not specify any particular figure. Did my photos come through? I don't know how the state got information that I've been rending my room, but the 1099 seems a logical answer. That, and I have declared the Airbnb income, and provided a copy of the 1099 on my City, State and Federal income taxes over the last three years.
Curt
Hi Carrie
From:
Pennsylvania hotel occupancy lodging tax
www.pacode.com/secure/data/061/chapter38/chap38toc.html
Chapter 38 Hotel Occupancy Tax
Hotel—A building in which the public may, for a consideration, obtain sleeping accommodations, including establishments such as inns, motels, tourist homes, tourist houses or courts, lodging houses, rooming houses, summer camps, apartment hotels, resort lodges and cabins and other building or group of buildings in which sleeping accommodations are available to the public for periods of time less than 30 days.
Curt’s comments, “ need to determine definitions of above terms to see if you are a “hotel” as defined above.”
From article 7-22-2014 www.wearecentralpa.com/news/zoning-board-rules-against-tourist-homes
STATE COLLEGE, CENTRE COUNTY - A decision has been made on a controversial zoning issue in a Centre County borough.
The State College Zoning Hearing Board decided the way two borough homes were being used were in fact for "tourist home" purposes and say it won't be permitted.
The two homes at question are zoned as R-2 residential properties, meaning they are specifically designed to be a single-family home in a residential zoned neighborhood, but these two properties are being used for what the borough and neighbors are calling "tourist homes."
"It takes away from the neighborliness of the neighborhood," Janet Engeman said.
Engeman is pleased with the Zoning Hearing Board's decision Tuesday.
"This is what I was hoping would take place," she said. "I live just a couple doors away from those properties and we've been aware of the problem for quite some time."
She, other neighbors and the zoning board said 612 Walnut Street and 138 West Prospect Avenue are being advertised as vacation homes. They're often rented out on a short-term basis for special event weekends, especially during Penn State's football season.
Neighbors said not having consistent residents in the homes goes against code and is making their neighborhood less neighbor-friendly.
Now, the borough said this type of transient housing isn't allowed.
"The critical matter here was that the two owners were not occupying those two homes," Stanford Lembeck, Chairman of the Zoning Hearing Board, said. "They live some place else."
Pennsylvania definitions:
20.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Boarding house—A building or portion of a building occupied for human habitation in which five or more persons, not related to the proprietor or manager, are furnished with meals and lodging.
Lodging house—A building or portion thereof in which five or more persons, not related to the proprietor or manager, are furnished with sleeping accommodations and shall include rooming houses, bachelor apartments, dormitories, barracks, bunk houses and other kinds of buildings used to furnish sleeping accommodations.
Curt’s comments: “so you are not a boarding or lodging house unless 5 or more persons were staying there.
Rooming houses: There seems to be no definition in the above PA law so:
www.planning.org/pas/at60/report105.htm
AMERICAN SOCIETY OF PLANNING OFFICIALS
1313 EAST 60TH STREET — CHICAGO 37 ILLINOIS
Information Report No. 105
December 1957
Rooming Houses
A Problem of Definition
Hundreds of zoning ordinances have loopholes that permit group living arrangements. In most of these cases, potential difficulties are caused by unsatisfactory definitions. It is always nice, of course, to have at least a general idea what an ordinance is talking about when it uses a particular term. But technicalities are particularly important in this field. Sloppy definitions enable the promoters of unwanted group living arrangements to claim that it is some other use that is on the permitted list. Unhappy neighbors have occasionally unexpectedly been forced to adjust to 40 or 50 fraternity brothers living together in a one-family zone.
Three important distinguishing characteristics of group living quarters are laid down in the zoning ordinance of Bismarck, North Dakota (1953):
The occupants are [or at least may be] unrelated;
Separate cooking facilities are not provided for individuals or groups of individuals;
Persons residing in the building are domiciled more or less permanently, in contrast to the transient residents characteristic of hotels . . .
Curt’s comments “so you do not seem to be a “lodging houses” “.
I am not sure what your redress is but you seem to not fit the definition of hotel as long as you occupy a portion of the house and have had 5 or fewer guests at a time. I would politely tell them to pound sand. I am not a lawyer but would suggest you send a polite letter to the State and say that you do not fit their definition of hotel. You simply occasionally rent a room in your house that has not been modified in any way to change the single family characteristics and that you did pay income tax on the Airbnb activity and see what comes next. For the form I would check off $0 as hotel income send the form and the letter back to them.
Regards, Curt and good luck
Curt
Hi Carrie,
More thoughts on this. Suggest you simply send the form back in that you owe $0 dollars and maybe a very short letter that you are not a "hotel" as defined by Pennsylvania law. Don't add all the stuff that I sent you as to why you are not a hotel. But...... put them on the point of proving that you are a hotel. Put them on the defensive and make them do the work to prove that you are a "hotel" which I feel you are not. This process could take many months. Don't panic. Hang in there. Again I am not a lawyer but do you have a lawyer friend that may know something about real estate law to contact. In my legal activity with Michigan tax litigation I have an action that affects my taxes that I am fighting and will win but it takes time. Just relax for a bit and fight this. At worst it will be an additional interest penalty but at best you will owe nothing.
Regards, Curt
Carrie
Thank you so much, Curt. Your information was very helpful, and probably not something I would have found on my own. Much gratitute!
Carrie
Jumping back in here to provide a follow up.
I talked to a lawyer, who, unfortunately said that the state's definitions are so broad as to be almost meaningless. He also said that fighting this would be a long, time consuming process.
I also talked to my accountant who is trying to get a handle on things on his end.
I also called Airbnb's San Francisco # & was told my case would be forwarded to the tax department. I send the CS agent a copy of the above State letter. After close to a week, I got this response from Airbnb. (hmmm. I thought I could insert an image into the response, but the camera icon doesn't seem to be working properly. I'll copy & paste)
Grrr. Can't copy & paste either! Urrrggg. As if this weren't annoying enough!
Here's what the Airbnb Tax Department responded with:
***
Carrie,
We are filing one tax return per jurisdiction, with the total combined reservation revenue. This means that all hosts located in Florida will be represented by one remitted amount, and we will not be providing your personal information on the return. We're dedicated to keeping your personal information private - if at any point we're required to share any information with your local government, you'll be specifically notified.
Hosts may view the amount of occupancy tax paid by guests in the Gross Earnings section of their Transaction History, and can confirm which juristictions are being accounted for from Manage Listing>Location, underneath the Adress section.
This can also serve as documentation of said taxes being collected, paid for and remitted on your behalf.
In 2016, Airbnb plans on getting more detailed CSV for our hosts that include a detailed account of tax amounts.
Let me know if I can continue to support.
Evan
I see very little way that his email actually related to my situation. Am I missing something? Does this make any sense???
Steve
Welcome to the club. Imho, its AirBnb's job not mine to collect and remit any required taxes not let the home owners find out years later that they owe back taxes. In my case, several thousand dollars. Thanks for contacting the Penna Dept of Revenue with my information, Air BNB, you RATS! I have just unlisted my two AirBNB listings. it is not worth the huge hassle to have to get get a Business licence as a hotel operator (really - my spare bedroom?), pay quarterly taxes to State and City, collect and remit monthly hotel occupancy taxes. No thanks. AirBNB you can take this "sharing economy" business of yours and stuff it where the sun don't shine.
Carrie
I got a response from Airbnb saying that they did not share information... so I don't know if the State went through the 1099's or if they have an "investigator" on staff that found out. It's really frustrating. And the response from Airbnb (other than to say that the State did not get the information from them) was to tell me how to go through my account to get the information (# of nights occupency & income earned) in order to report it.
Scott & Ed
HI Carrie,
I am in the same situation as you are, I have recieved the same letter. I simply filled out the form provided, i used the account number on my 1099 for first section and put in parenthesis see next page, in which i copied a few pages from my reservations and the occupancy tax that was collected.
I then filled out the rest of the form truthfull with how long my listing has been up and revenue I made.
I supplied my phone number and sent this in a few weeks back. I haven't heard from them, so not sure what the next step is there.
I did file for an LLC for my airbnb listings to separate my indivual income from the airbnb earnings.
Let me know if you would like to discuss furhte rat our next airbnb monthly meetup!
www.meetup.com/Philly-Airbnb-Meetup/
Rich
I can see why Airbnb is not eager to jump in and tell you whether you owe these taxes or not, or offer an interpretation of Pennsylvania law that could get them in trouble.
I also received this letter and looked up the same PA code. Without commenting on whether either of us run a "hotel" it seems that as written, if you have a building where the public can pay to stay for periods under 30 days, then you have a "hotel" as the law defines it.
Carrie
Yeah, I get that. What I'm still not completely sure about is which taxes Airbnb is collecting. The letter says there's a 1% city hotel tax, and my understanding is that Airbnb was to begin collecting city, but not state taxes. But Airbnb is collecting a lot more than 1% in taxes. So, how do I (and my accountant) know which taxes to pay? Do you know?