A short-term room for rent is advertised on the Airbnb platform. The temporary stay company has agreed to collect taxes on behalf of the City of Fresno for rentals in town. Photo via Airbnb

Airbnb property owners in the City of Fresno will soon have to start paying taxes on the properties they rent out.

The Fresno City Council voted at its March 7 council meeting to approve a voluntary collection arrangement between Airbnb, Inc. and the city for its transient occupancy tax.

Starting on April 1, Airbnb has agreed to start the reporting, collection, and remittance of applicable transient occupancy taxes and sales taxes under Fresno’s tax code on booking transactions completed by Airbnb property owners, or hosts, and guests on the temporary rental platform.

Airbnb will report information on the host’s tax form including an aggregate of gross receipts, exemptions and adjustments, and taxable receipts.

City Manager Georgeanne White said the city has had difficulty finding who owns Airbnb properties in the city, as short-term property rentals are registered on a volunteer basis.

“That is going to help drive up that revenue source so that they are collecting it on our behalf and remitting it back to us, but right now we are fully dependent on people who own the homes. I don’t know how great that is,” White said.

White said this comes after a year of Airbnb rejecting an agreement, even after the city had made multiple changes to the tax code proposal.

During Mayor Jerry Dyer’s January trip to speak at the U.S. Conference of Mayors in Washington D.C., he discussed with Airbnb’s national government affairs person the difficulties Fresno was having in coming to an agreement.

During the March 7 council meeting, Dyer said that Airbnb collecting the information and remitting the tax revenue is a “heavy lift” for them to perform.

“That’s the assurance they gave to us, and I think it’s going to be about $2 million a year,” Dyer said.

The city does not have agreements with other short term rental platforms like Vrbo, which does not have an agreement with any jurisdiction to collect and remit the taxes on their rental properties, said Ruth F. Quinto, assistant city manager.

“Vrbo does not do that for any of their rentals online so they wouldn’t start with us,” Quinto said.

Through this agreement, hosts will have to provide Airbnb its applicable tax identification or registration number, applicable business identification number and acknowledge their obligation to collect all taxes owed on a host’s Taxable Booking Transaction and to remit and report any taxes collected to the taxing jurisdiction.

Airbnb will not be liable for a registered host’s failure to comply with any applicable tax collection and reporting.

Hosts will not have to collect or remit the taxes themselves but will be required to register with the taxing jurisdiction to collect, remit, and/or report taxes.

Quinto said the city does have a way to collect information on short-term rental properties through its own data sources and has done outreach, which has been successful with several hundreds more compliance applications being submitted.

City Council President Annalisa Perea said there are hundreds of properties not being accounted for, leading to the $2 million in missed revenue projections.

Councilmember Miguel Arias said that he is frustrated that the City has not addressed collecting tax revenue from Airbnb, and from cannabis dispensaries, with urgency.

“As pointed by the city manager, we approved it a year ago, this body had been asking for two years prior to that to start charging Airbnb operators from making a killing in the housing market and keeping houses from being permanent housing for folks to make a profit,” Arias said.

White said that the city kept on going up Airbnb’s chain of command regarding tax collection but were rejected until Dyer spoke with the government affairs person.

“We started with the appropriate levels, and we had those diplomatic conversations upon the council’s urging. We want to be a good community business partner and we did what we needed to do,” Quinto said.

City Controller Santino Danisi said that they did the “painstaking work” of looking at Fresno listings on the Airbnb and Vrbo platforms, but it is labor intensive because the addresses are not listed.

Trying to do a Google Maps correlation, almost by hand, Danisi said, is difficult because the properties listed are only short-term rentals and are listed for less than 30 days.

A quick search on the Airbnb platform for a weekend stay in Fresno with a search setting of a “flexible” date schedule produced 838 listings.

In the fall the city started using a new software platform, RentalScapes, which does have location data.

“What we’ve just started doing now this fall is actually sending notices out to short term rentals where we’ve now confirmed and verified that have been listed on Airbnb, Vrbo, really any platform. We know an estimate of what their gross sales bill and we are sending them a tax bill for that tax back,” Danisi said.

Danisi said there hasn’t been a great success rate in property owners responding to payment notifications, with Airbnb’s voluntary collection agreement being the premier route.