Transient Room Tax Questions Raised For Airbnb, VRBO

Short-term rental companies such as Airbnb have enjoyed popularity in the past few years, but they exist in a “legal gray area” when it comes to paying taxes for temporary lodging providers in Lane County. EW reported on this nebulous legal area last summer (“Airbnb Flies Under the Radar,” 6/24/14). Until now, no action has been taken to clarify proper procedure.

Airbnb and the online vacation rental marketplace VRBO (Vacation Rentals by Owner) are considered transient lodging intermediaries, or “online travel companies.” In Oregon, OTCs are required at the state level to collect and pay a 1 percent lodging tax for all transactions generated. Along the same lines, Lane County’s transient room tax (TRT) varies from 7 to 9.5 percent, depending on the property’s location.

Kevin Leinbach is a Eugene property owner who has listed part of a residence on both Airbnb and VRBO. Leinbach has received many inquiries through these services, but one in particular caught his attention — he received a notice issued on June 17 by a Eugene finance clerk, stating that individual property owners using VRBO are responsible for collecting and reporting the transient room tax.

Leinbach says that he knows a few other local VRBO users who got the same notice on the same day, but that nothing was mentioned about Airbnb — a company recently valued at $25 billion. VRBO, unlike Airbnb, which is a private company, is a subsidiary of an already publicly held company with strong stock and a near $3 billion market cap. A case could be made for passing tax accounting duties upward, and Leinbach says he is hoping for as much.

The transient room tax for Lane County, Springfield, Florence and Cottage Grove is managed by the city of Eugene. According to Eugene’s website, “anyone who stays overnight in a temporary rental unit or space” must pay the tax, and “any owner, person and/or operator” must collect it. An OTC is neither an owner, nor an operator, but as a corporation, it may qualify as a person. OTCs are already paying the state, and in March 2014, Portland became the first city in the country to streamline accounting resources by allowing Airbnb to pay the lodging tax on behalf of hosts.

Despite the dissemination of the policy, neither the Eugene City Council nor the Lane Board of County Commissioners has listed discussing the room tax or online travel companies on upcoming agendas

City of Eugene Senior Accountant Doug Lauderbach did not respond to EW’s questions before deadline. — Adrian Black