City’s agreement with HomeAway streamlines sales tax collection process
STEAMBOAT SPRINGS — City Finance Director Kim Weber said a new voluntary collection agreement between the city of Steamboat Springs and HomeAway should make life easier for homeowners looking to rent their properties.
“It does make life easier for us, but really, it makes life easier for the homeowners that are renting their properties,” Weber said. “We’re OK managing all the multiple tax license holders, but what was difficult was for the property owners to process tax one way for the state and a different way for the city.”
Under the new agreement, which begins March 1, any homeowner advertising their property for rent through HomeAway and its subsidiaries is not responsible for collecting and remitting city sales tax and lodging tax. Instead, HomeAway will automatically collect city sales tax through its online process. The city already has a similar arrangement in place with Airbnb, which went into effect in November 2016.
“It (taxes from vacation home rentals) is a big part of the sales tax that we collect, and on top of that, it’s a big part of our lodging tax,” Weber said. “The (lodging) industry itself is shifting to where these vacation home rentals are becoming a bigger portion of that market.”
According to AIRDNA, which tracks vacation rentals, there are 3,496 active rentals in the Steamboat Springs area with 20% listed through Vrbo, 32% on Airbnb and 47% listed on both sites. Rentals within the city are required to collect and remit 9.4% or 11.4% in sales tax depending on the location of the rental property. The tax is remitted to the city, county and state with 4.5% going to the city.
Weber said the tax collection process was complicated in October when HomeAway, Vrbo and Airbnb began collecting state and county taxes to comply with new state law.
“On Oct. 1, the state of Colorado imposed a law that said marketplace facilitators had to collect and remit the sales tax,” Weber said. “HomeAway, Airbnb and Vrbo all began collecting the state and county sales taxes on all the transactions and remitting it to the state. That was not the case for the city because the city law didn’t change “
Because Steamboat is a home rule municipality, property owners in Steamboat were still required to collect city sales tax and remit those to the city. The agreements with HomeAway and AirBnb now allow the companies to do that for the property owner.
“It doesn’t mean we will have increased lodging and sales tax, although we foresee that there will be increased compliance, which will probably increase revenue,” Weber said.
The new agreement means the bulk of rental properties in the city will have sales taxes collected at the time of the transactions.
The HomeAway family consists of Vrbo, HomeAway.com, Homelidays.com as well as several international booking sites.
“I’d like to thank the city’s sales tax division for their efforts over the past four months in working with our sales tax customers after major changes were made to the Vrbo website that impacted the homeowners ability to collect and remit tax easily,” Weber added. “Ultimately, these changes led to the decision to enter into this agreement.”
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