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Last June, the Supreme Court overturned a rule requiring businesses to have some form of physical presence in a state in order to be subject to sales tax collection liability within that state. Hoteliers think that’s as good a reason as any to hit at upstart competitors who threaten their privileged incumbent status.
At issue are lodging taxes assessed by states and local governments, a source of much consternation for government officials and homesharers alike ever since the inception of the sharing economy. Hotels have argued that homeshare services like Airbnb should be treated the same as the biggest hotels are when it comes to regulation and taxation. Homesharers, on the other hand, have pointed out that this business model is very different from that of hotels and would be devastated by being exposed to regulations and taxes designed for a different industry.
Airbnb - Homesharing - Services - State - Governments
Airbnb and other homesharing services have worked with state and local governments to develop “voluntary collection agreements” (VCAs), by which Airbnb agrees to collect taxes on behalf of homesharers that use its platform and remit them. In return, Airbnb receives a form of legal legitimacy, and a tax system that is more tailored to its business model. VCAs aren’t a perfect solution, but they are better than simplistically imposing hotel taxes on a very different new industry.
The Supreme Court’s decision in South Dakota v. Wayfair, hoteliers argue, changed that. The American Hotel and Lodging Association released a report arguing that the Wayfair decision means that states and localities, no longer bound by “physical presence” rules, now can hit Airbnb with whatever taxes it likes.
Argument - Bit - Sequitur - Presence - Issue
However, this argument is a bit of a non sequitur. Physical presence was never at issue — homesharers of...
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