Airbnb Not Paying Its Fair Share of Taxes in Georgia?
Three cities and one county in the state of Georgia have filed a lawsuit in the United States District Court for the Northern District of Georgia in Rome on Friday, January 31, 2020 which claims that Airbnb, Incorporated is failing to collect taxes and not paying its fair share of them to local authorities…
Airbnb Not Paying Its Fair Share of Taxes in Georgia?
…and because the lawsuit alleges that hundreds of communities, municipalities, and governments in greater than 100 counties in the state may also be affected, class-action status is being sought by Hart County and the cities of Rome, Cartersville, and Tybee Island, which are the plaintiffs — and a judge would need to decide whether to allow the lawsuit to proceed with statewide class-action status.
Airbnb Payments, Incorporated — which is a company that is affiliated with Airbnb — is also named as a defendant in the lawsuit. The headquarters of both companies — which are incorporated in the state of Delaware — are in San Francisco.
“The suit comes just weeks after Bartow County Commissioner Steve Taylor approved an ordinance amendment establishing new standards for short-term rental properties throughout unincorporated portions of Bartow”, according to this article written by James Swift for The Daily Tribune News in Cartersville. “The lawsuit does not specify an exact amount sought by the plaintiffs, although the documents filed in federal court last week suggests damages are in excess of $5 million.”
The city of Cartersville is among several communities in the state of Georgia which has ordinances to collect taxes for short-term rentals, which is the primary business model for Airbnb — but the company allegedly has not complied with the respective ordinances of those municipalities pertaining to local excise and occupancy taxes and remitting them to those local authorities.
Airbnb, Incorporated has violated Georgia law by “failing to properly identify, categorize and quantify” occupancy taxes which are actually due or being paid by occupants, as alleged by the plaintiffs.
The lawsuit additionally accuses Airbnb, Incorporated of violating the Deceptive and Unfair Trade Practices Act of the state of Georgia by “misrepresenting to consumers and owners that defendants are displaying and collecting occupancy taxes, which in fact defendants do not display or collect”; but the plaintiffs do not actually have to demonstrate proof of any “intent to deceive” on the part of Airbnb, Incorporated — nor are they required to show monetary damages or loss of profits stemming from the practices of the company.
According to the document of the lawsuit, “By letter of February 10, 2015, counsel for Plaintiffs made demand upon Defendants that they collect and remit the applicable excise taxes due Plaintiffs and the Plaintiff Class. A true and correct copy of counsel’s February 10, 2015 letter to Airbnb is attached hereto as Exhibit “B”. Defendants refused the demand.” Demand letters were allegedly sent again on Friday, January 27, 2017 and Wednesday, January 23, 2019 — but with no response from the defendants.
“Through contract and by being the sole contact between the owners of the accommodations and the consumers, defendants have inserted themselves into the tax collection process and stepped into the shoes of the accommodation owners,” according to the document of the lawsuit.
A declaratory judgment and injunctive relief requiring future compliance with the occupancy tax laws is sought by the plaintiffs, who are requesting that a federal judge allow them to “recover all penalties, interest and reasonable and necessary attorney’s fees” as part of the lawsuit — and additionally requesting that the costs of litigation be paid by Airbnb for having “acted in bad faith, been stubbornly litigious and caused the plaintiffs unnecessary trouble and expense.”
No court date has been officially set at the time this article was written.
This is not the first time Airbnb has been at the center of controversy in the state of Georgia. When Joe Gebbia was elected to represent District 4 of the newly incorporated city of Brookhaven in the state of Georgia in December of 2012 as one of the original members of its city council, he likely never thought that he would find the city council on which he served for six years vote in December of 2018 on whether or not Airbnb would be banned from doing business. The only problem was that his son — the junior Joe Gebbia — is one of the co-founders of Airbnb. He recused himself from the vote.
Effective as of Wednesday, July 1, 2015, Georgia law requires that a tax of five dollars is added per night to the folios of guests for hotel stays.
I would have thought that based on principal, potential customers should consider avoiding patronizing Airbnb on what could be considered questionable business practices, as alleged by the aforementioned plaintiffs…
…but numerous jurisdictions are listed at the official Internet web site of Airbnb, Incorporated which supposedly have agreements with those governments to collect and pay taxes on behalf of hosts when properties are booked — and every state in the United States is included on this list with the exceptions of Georgia and Hawaii.
Does that mean that Airbnb, Incorporated will be exonerated from the allegations by the defendants? Only time — as well as a possible court case — will tell…
All photographs ©2017 by Brian Cohen.