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Airbnb Hosts Owe Millions in Taxes, Says Attorney General

Wednesday, October 16, 2013 - 09:05 PM

Renting a room or an apartment through the popular website Airbnb is easy to do and an easy way to make extra money.  And according to the state’s Attorney General, it’s also an easy way to avoid paying taxes.

Citing figures from the company, the Attorney General’s office said the the top 100 Airbnb hosts in New York state grossed over $54 million in the last three years. That amounts to $8.5 million in state, local and occupancy taxes, much of which could be going unpaid.

“New York can’t afford to leave this much money on the table,” said spokesman Matt Mittenthal in a written statement. “The Attorney General intends to enforce the law to make sure Airbnb plays by the same rules as everyone else.”

Airbnb's CEO and co-founder Brian Chesky recently said users should pay hotel occupancy taxes and that the company wants to work with officials to streamline the process. 

Last week, Attorney General Eric Schneidrerman subpoenaed Airbnb for information about the 15,000 residents in New York City who use the site to rent out rooms. A source familiar with the investigation said the office is looking for information about Airbnb users violating state laws and operating possibly illegal hotels. 

The company responded to the subpoena in state court asking to keep the information private.

It’s also been pointing its users to sign a petition started by an Airbnb host asking the New York state senate to save Airbnb by amending a 2010 law that is at the heart of the dispute.

 

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Comments [8]

in defense of affordable housing

Ellie,

You make an excellent point about the taxes that are not being paid by practitioners of a parasitic business which stresses the infrastructure and services taxes pay for, so that those of us who are paying our taxes bear the brunt and burden of supporting exploding tourism in our residential neighborhoods from which others profit financially while we gain nothing but headaches from overcrowding and transience.

I understand that one person who was doing this in Little Italy made approximately half a million dollars over a four-year period renting out a rent-stabilized apartment while living in a luxury home in New Jersey with her new, well-to-do new spouse.

But more importantly from my perspective and experience, this practice is forcing rental prices precipitously upward, and encouraging landlords who are colluding with the hotel brokers to convert rent-stabilized apartments to market rent at very rapid rates, not always entirely legally, and to harass rent-stabilized tenants to get them out because they can make such huge profits off this illegal practice.

We have slid very far down this slippery slope, and I again encourage people to support AG Schneiderman's efforts and to encourage other representatives to defend the public's right to fair housing by regulating this practice which has spread like wildfire.

Oct. 18 2013 04:33 PM
ellieny from Manhattan

I'm surprised it's only $8.5 million if they are including state and local income taxes, in addition to hotel occupancy taxes. A lot of people seem to be making an extra 20-40k that they aren't reporting, and I would expect the income taxes on that, over 3 (?) years to be substantial.

I don't have a problem with someone sharing their apartment with occasional guests (as in a roommate situation) or subletting it when they are away. But I do have a problem with people who do this constantly, and go to a country home or some other place they own or rent while raking in $$$ on the AirBnB rental. I'm not saying they shouldn't do it, I'm just saying they should be paying federal, state and local income taxes on that income (plus hotel tax). Otherwise, the rest of us pay more.

Oct. 18 2013 03:39 PM
in defense of affordable housing

Eric Schneiderman is to be commended for taking up this pressing issue in the face of major push back. I am a rent-stabilized tenant in Little Italy, whose safety, building security, quality of life, and health have been jeopardized by hotel operators, cross-listing on airbnb and another mid-level site, possibly in collusion with our landlord, who have managed to obtained leases on apartments in my building and other buildings on our block in order to create a whole business of renting these apartments out for $150-$300 per night. Our building has experienced a major burglary, we are kept up at night by blasting music and domestic fights, we are forced to endure hallways reeking of marijuana, filthy with dumped garbage, and our front door lock has repeatedly broken (wide open for anyone to walk in, or we are locked out and/or trapped inside the vestibule, a fire safety hazard) after temporary hotel guests' copies of the key don't work and they force the lock. Other neighbors in Little Italy had no less than three apartments around a regular hotel rental invaded by bed bugs. Let's not whitewash a very ugly illegal practice that is one of the single-most serious threats to the affordable housing that still exists for struggling middle-class workers in this city. Schneiderman is doing the right thing: no wonder he is being attacked. Instead, let's encourage our other elected representatives to come forward to support Schneiderman's efforts. Remember: it could be your apartment that becomes unlivable next.

Oct. 18 2013 10:27 AM
Dave K from Manhattan

Hey! Let's bend the little guy over and ream him for a micro pittance of what is NYC policy to give away IN TAX BREAKS to corporations as 'incentive' to keep them in residence!
If the littlest billionaire wants to recoup 53 million why not do it while improving the city?
Ticket texting drivers, ticket drivers who sit on their horns no reasons to do with infantile rage ( horns do NOTHING to alter a traffic situation), ticket all vehicles driving with two wheels on the bike lanes, ticket DHL delivery folks for using bike lanes S their personal delivery avenue, ticket jiggers and dog walkers in bike lanes, ticket restaurant delivery guys and anyone who ignores a bike lane on their left and chooses to ride outside the lane on the roads right hand side, ticket motorized bikes and skateboards operating on sidewalks, ticket landlords daily for violations that go unpunished year after year, REVOKE the.TAX EXEMPT STATUS of the NFL in New York State.
- alright maybe that last one wouldn't improve anything our anger that the bigboys get all the breaks.

If 290 texting tickets were writ each day in NYC's borough s ; mike would have his $53.000.000...
Yes less police costs, but spare me any defense of this whitewashing of breaks for business and the filthy rich.

AirBnB. This is not a fiscal idea, it's one more diversionary tactic.
Who but a billionaire?!

Oct. 18 2013 08:18 AM
Mary from Brooklyn

They should differentiate between those that are filling a room/apartment for an temporary absence in order to cover the rent, and those who are actually making a profit from continually renting their room/apartment on short term basis. I've never used airbnb, but after the financial crisis of 2008 when both my roommates left suddenly leaving me with an enormous rent I started renting those rooms short term until I could get long term roommates. Certain times of the year it's really hard to get those long term roommates, and daily or weekly rental may be necessary to help cover the enormous cost of renting any apartment in this overpriced city.

Oct. 18 2013 08:16 AM

Maybe the city should start collecting normal taxes on private homes in NYC, especially Manhattan. A $10-million-dollar brownstone pays taxes of $300K if separated into condos, but only $3K if kept as a private home. Mayor Bloomberg is paying almost nothing in property tax.

There should be a means test to prevent middle class folks from being unable to stay in their homes, but billionaires should be paying full taxes on their mansions.

Oct. 17 2013 03:14 PM
pattie from Upper West Side

Shameful how Schneiderman has turned out! Airbnb, Yelp, no politicians to get after? crazy!

Oct. 17 2013 10:53 AM

state needs to chill out & collect taxes going forward. it's a new category.

and the city needs to start charging taxi-related fees to all cars signed up for diy taxi dispatcher apps -- and refund every sent paid by taxis for medallions. Very USSR, medallions need to go asap.

Embarrassing way to make money, esp. for GOP mayors.

Oct. 16 2013 09:40 PM

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