Changes may be coming to the enforcement of the Montgomery County Hotel Room Rental Tax, a hotel occupancy tax assessed by Montgomery County government.
The Montgomery County Commissioners are slated to potentially consider changes to the Montgomery County hotel occupancy tax regulations during this month.
“Technically, the property owner who lists through Airbnb is supposed to remit the hotel taxes to the County,” explained Mr. John Corcoran, Director of Communications for Montgomery County. “But there is no way to know each time there is a rental, only Airbnb has that info, and they weren’t considered one of the entities required to pay under the old law. Under the new law, anyone who gets a cut of the money paid to rent a room is obligated to pay the tax.”
The new law referenced by Mr. Corcoran is one that the Pennsylvania General Assembly recently passed that deals with several facets of hotel occupancy and the taxes applicable to the industry. You can view the piece of legislation – Act 109 approved on October 24, 2018 – by clicking here. The new law goes into effect on January 22, 2019.
“As to Act 109, it is yet to be determined how this will effect Airbnb,” stated Mr. John Longstreet, President and CEO of the Pennsylvania Restaurant & Lodging Association. “The legislation was intended to ensure that online resellers of hotel rooms were remitting the full occupancy tax, both at the state and county/local level.”
The Pennsylvania Department of Revenue has published a summary of the impact of the new law. You can view that summary by clicking here.
The new law, though not yet in effect, is having an impact on how Montgomery County may enforce its Hotel Room Rental Tax.
Airbnb had indicated that it was “having conversations with Montgomery County” regarding a voluntary tax collection agreement with the County.
That is not correct, according to Montgomery County.
“Airbnb is not currently in discussions with Montgomery County,” stated Mr. Corcoran of Montgomery County. “They were in discussions earlier…[in 2018], and the contract they proposed was rejected because under the terms there was no way to audit or verify that the information they would provide the County was accurate and this change to the law was in the works. There was no reason to accept their proposal. The provisions of the law that is about to take effect are better for the County.”
Montgomery County expects that Airbnb and other similar businesses will make certain that the Montgomery County Hotel Room Rental Tax is being charged, collected, and remitted to Montgomery County government.
“It’s likely that [currently] only a small number of Airbnb hosts have been paying the tax,” Mr. Corcoran continued. “It’s likely that some, if not most, aren’t aware of the tax. Under the new law, Airbnb and other sites that get a portion of whatever the renter is paying are required to collect and remit the tax and it will be possible to audit those records.”
When asked if the change in the Pennsylvania law will see Airbnb pay all hotel occupancy taxes directly to all governmental entities with a hotel occupancy tax in place as of January 22nd or whether Airbnb will continue to do so only with those governmental entities in which Airbnb has voluntary tax collection agreements, the response from Airbnb was:
“This law does not apply to self administering jurisdictions,” stated Ms. Liz DeBold Fusco, Northeast Press Secretary for Airbnb. “We are continuing to work to reach voluntary tax collection agreements across Pennsylvania with those jurisdictions.”
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The logo of Montgomery County is provided courtesy of Montgomery County.
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