Tennessee gets twice the expected haul in taxes from Airbnb rentals

Since agreeing last year to remit occupancy and sales taxes to Tennessee and its major cities, short-term rental platform Airbnb has sent $23.5 million into government coffers, according to the company – close to twice what was than expected.

That’s sales tax money for the state – a 7% rate – and for local governments ranging from 1.5% to 2.75%; and local occupancy taxes for Knoxville, Memphis and Hamilton County.

At the start of last year, Airbnb agreed to collect state and local sales taxes, instead of leaving that responsibility up to individual hosts. The agreement went into effect March 1, and from then through Dec. 31, the company sent in $22.4 million in sales tax revenue.

“This tax agreement is allowing our hosts and platform to deliver revenue and economic activity to rural parts of Tennessee that lack traditional hospitality options,” Laura Spanjian, Airbnb’s senior policy director, said in a news release. “We hope to build on this economic impact in year two.”

Based on a calculation of the previous 12 months’ tax liability, Airbnb expected to remit $13 million in sales taxes, according to company spokesman Ben Breit. He didn’t have a breakdown of how much in local sales went back to individual cities.

The state keeps “a small percentage” of the local sales taxes it receives to cover administrative costs, but sends the rest back to counties and cities, said Kelly Cortesi, communications director for the Tennessee Department of Revenue.

State confidentiality laws prohibit discussing what’s collected from Airbnb, or any individual taxpayer specifically, she said in an email.

“In general, I think the Department of Revenue would agree that these sort of tax remittance agreements, where they are in place, do offer not only convenience, but also promote increased compliance,” Cortesi said.

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Local occupancy taxes 

Airbnb, alone among short-term rental firms, also has agreements with three local Tennessee governments to collect their local occupancy taxes for its hosts.

To date, Knoxville has received $91,784.20 in occupancy taxes since the agreement with Airbnb went into effect June 1, according to Jim York, the city’s senior director for finance. Some of that probably comes from hosts who rent through other short-term rental platforms, but most of that money is likely from Airbnb, he said.

Airbnb itself reported sending a flat $91,000 to Knoxville.

The biggest recipient of occupancy taxes was Memphis, which got $699,000 from Airbnb, but its agreement was in place all last year.

Hamilton County, which includes Chattanooga, received $303,000 from September 1 to the end of the year, according to the company.

More than 1.4 million people stayed at Airbnb rentals in Tennessee during 2018, according to the company. The big draws to Knoxville were University of Tennessee football games and other UT events, while Memphis saw lots of visitors during its May festival season, Airbnb reported.

UT football brought about 7,300 visitors and $655,000 in rental income to Knox Airbnb hosts in 2018, according to the company. Altogether Knox County hosts took in $5.1 million from 50,000 guests last year, an Airbnb report said.

All of Tennessee’s major cities have established short-term rental rules – Knoxville was the last to do so – but Nashville does not have an occupancy tax collection agreement with the company.

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