City officials on Tuesday said homeowners who host guests using Airbnb will need to start self-reporting their transient room tax incomes to remain in compliance with a city ordinance.
During Tuesday’s City Commission meeting, City Attorney Mark Pfeifer and Director of Finance & Support Services Angela Waninger said Airbnb has not been collecting or remitting the required transient room taxes throughout the state, except in the three biggest cities.
“To my understanding, they are only collecting for those that were grandfathered in, which would be Louisville, Lexington, and Bowling Green. (Those cities) had agreements with Airbnb prior to this change in the legislation,” Waninger said.
The transient room tax previously only applied to hotels and motels, but the Kentucky legislature amended the state law to say it also applies to property rental companies such as Airbnb and Vrbo (for temporary stays that do not exceed 30 days).
While the Daviess County Fiscal Court approved a 6% transient room tax for rental properties within county limits, the City of Owensboro later approved a 4% rate for such properties within city limits. This combined makes properties inside city limits see a 10% rate.
Pfeifer noted that per the ordinance, it is on the property owner to personally collect and remit the tax unless the rental platform — in this case Vrbo, Airbnb, Expedia, etc. — entered a written agreement with the City of Owensboro.
“Currently, we have kind of an odd situation; Vrbo and Expedia are collecting and remitting the tax to our finance department, but no agreement has been reached with Airbnb, who has refused to collect and remit,” Pfeifer said.
Pfeifer said that has led to an “unfairness” between renters using Airbnb compared to other rental property companies. He said one solution would be to amend the ordinance to ensure the tax is properly collected from all renters.
Waninger said that any renter using Airbnb should complete their own transient room tax form (found here). According to Waninger, paperwork would be due on the last day of the month and would report the previous month. Should someone not report their taxes, Waninger said they could face legal action.
“Any person violating any provision of the City’s ordinance may be subject to a fine of not more than $500 for each offense and/or imprisonment for not more than 30 days. It should be noted that every month for which a report was not filed constitutes a separate offense,” Waninger said.
Waninger said that if any renter has questions, they should call the City’s finance department at 270-687-8523.
