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Airbnb could soon pay sales tax on short term stays

JACKSON-The Department of Revenue (DOR) has made plans to reinterpret several tax laws to require people renting homes or condos through services like Airbnb to be taxed like a hotel is, for a short term stay. 

“It’s not what it does to Airbnb it’s what it does to the individual homeowners in Mississippi,” said Representative Jay Hughes.

The change would target renters that are staying for less than 90 days. It would require the home owner to collect a 7 percent sales tax on the rental and for some locations they could potentially be required to collect a tourism tax. Those taxes would then be paid to the Department of Revenue.

The state is in a major revenue shortage and Hughes said that instead of holding the tax cut from last year the DOR is going to increase taxes by reinterpreting the law.

The DOR plans to issue a letter ruling to define hotels and motels in a new way. The rewrite would include town homes, condominiums or single family residences that are rented out between one and 90 nights through an online service.

The issue is addressed on Airbnb’s website, under the “Terms” page the company does instruct it’s users to adhere to local tax laws.

“In any jurisdiction in which Airbnb facilitates direct Collection and Remittance pursuant to the Airbnb Terms, you hereby instruct and authorize Airbnb Payments to collect Occupancy Taxes from Guests on the Host’s behalf at the time Accommodation Fees are collected, and to remit such Occupancy Taxes to the Tax Authority.”

“I question the validity of being able to make such a drastic change to tax law without involving the legislative and executive branch of our government,” said Hughes.

News Mississippi has reached out to spokeswomen for the Department of Revenue, Kathy Waterburry for a comment, with no success.

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