Airbnb to collect Iowa hotel tax

Airbnb stays in Iowa will get a bit more expensive in November.

The vacation rental marketplace has agreed to collect hotel and motel taxes in Iowa, including in the cities and counties that have their own hotel/motel taxes.

The tax collections will begin Nov. 1 and be charged as guests pay for their stays.

Under the agreement with the Iowa Department of Revenue, Airbnb will collect taxes on behalf of Iowa hosts and remit them to the state.

Hosts previously were responsible for collecting the taxes and sending them to the Department of Revenue, Airbnb spokesman Ben Breit said in an email.

'Through this agreement, Airbnb is effectively taking responsibility for the taxes and ensuring that Iowa is receiving 100 percent of the taxes it should be getting,” Breit said.

With Airbnb's marketplace, property owners can rent out their homes or specific rooms - similar to a traditional hotel - and set their own rates. Airbnb then charges its own fees to hosts and guests, not counting any taxes.

This is the first tax agreement Iowa has with Airbnb. The company has agreements with other states including Illinois, Kansas and Michigan.

Local municipalities do not have to work out their own tax collection agreements with Airbnb, Department of Revenue spokeswoman Nicole Watson said.

Iowa has a five percent hotel/motel tax effective statewide. Counties and cities can implement their own hotel/motel tax in addition to the state tax.

Cedar Rapids, Coralville, Iowa City, Marion, and North Liberty all have a seven percent hotel/motel tax.

Cities and counties that have hotel/motel taxes collected more than $56.3 million combined during the 2017 fiscal year. Des Moines collected the most at just under $6 million, followed by West Des Moines, Cedar Rapids and Coralville.

It's not clear how much Iowa stands to collect in hotel/motel taxes from Airbnb hosts.

Airbnb broadly estimated Tuesday the agreement 'will infuse hundreds of thousands of dollars in annual revenue” for Iowa. The company said there are 970 hosts in Iowa, and there were 20,000 'guest arrivals,” or visits, in 2016.

The amount of guest arrivals has grown 127 percent in Iowa in the last 12 months, Breit said.

The tax agreement does not regulate whether cities and counties have to permit Airbnb to operate within their boundaries, Watson said.

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