Airbnb wants Boulder tax collectors to stay away from the service fee.
The San Francisco-based short-term rental marketplace sued the city on Thursday, arguing that the fee — which Airbnb charges to both guests and hosts — should not have been taxed by the city in recent years.
The lawsuit filed in Boulder District Court essentially asks a judge to overturn a Boulder Municipal Court ruling last month, which found that the money collected from the fee is taxable. The municipal court ordered Airbnb to pay $415,000 — with about $150,000 of that in interest and penalties — for unpaid taxes on fees collected in 2018 and 2019.
A spokesperson for Boulder declined to comment.
As part of a deal between Airbnb and the city reached in late 2016 — when the short-term rental industry was still nascent — Airbnb agreed to collect taxes on transactions made through its site and pass that money along to the city.
Airbnb isn’t disputing that taxes are owed on the “nightly rental charge,” which is its term for what a host charges for their accommodations, including extras like pet fees and cleaning fees.
To Airbnb, the service fee is different. When customers are booking, it says the fee “helps us run our platform and offer services like 24/7 support on your trip.”
Airbnb notes that, during the period relevant to the dispute, Boulder’s code specified that the 7.5 percent short-term rental tax applied to the “price paid for the leasing or rental of any dwelling unit for a period of less than thirty days.”
Airbnb argues the service fee pays for Airbnb’s services, not for leasing a rental unit. The lawsuit indicates the company didn’t pay taxes specifically on the service fee charged to guests, not hosts.
In February, Boulder updated the code language that Airbnb highlights, according to the city’s website. It now states that the 7.5 percent is applied to “the price paid for short-term rental lodging services.”
Airbnb and an attorney representing it did not respond to requests for comment. It’s unclear if the company agrees that the service fee can currently be taxed, given the updated code language.
Airbnb said in the lawsuit that it will pay the $415,000 while it waits for a judge to rule on its lawsuit.
Airbnb’s service fee is taxed in Denver, according to Joshua Rosenblum, spokesman for the city’s Department of Finance.
Airbnb is represented in the Boulder lawsuit by attorney Neil Pomerantz of Denver’s Silverstein & Pomerantz and R. Gregory Roberts, an attorney in White Plains, New York.
This story was reported by our partner BusinessDen.
