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Airbnb Agrees To Collect Hotel Taxes In Another Huge U.S. City

July 19, 2016, 1:44 AM UTC
Berlin will from Sunday, May 1, 2016, restrict private property rentals through Airbnb and similar online platforms, threatening hefty fines in a controversial move meant to keep housing affordable for locals. / AFP / John MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)
Photograph by JOHN MACDOUGALL AFP/Getty Images

Airbnb has agreed to start remitting hotel taxes to the city of Los Angeles on behalf of its hosts in the area, the company said on Monday.

As part of the deal, the home-sharing company will collect lodging taxes from its Los Angeles hosts and hand the proceeds over to the city, similar to its existing agreements with San Francisco and nearly 200 other cities worldwide. The deal will go into effect in August, according to the Los Angeles Times, which first reported about the agreement.

Airbnb confirmed the details to Fortune.

“These agreements allow cities to rightfully benefit in the economic impact of home sharing while also making it easier for Airbnb hosts, ­the vast majority of whom are middle class people sharing their own home, to comply with local tax laws,” John Choi, Airbnb’s public policy manager for the Los Angeles area said in a statement. “We are pleased that this process is moving forward and will benefit Angelenos.”

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As of June, Airbnb has struck similar hotel tax payment deals with 190 cities, states, or other tax jurisdictions globally, according to a recent report the company released. It has already paid out more than $85 million in hotel taxes.

Because of its huge population and status as a tourist destination, Los Angeles is a major addition. Airbnb estimates that it would have paid out about $23 million in taxes on behalf of hosts in 2015 if Los Angeles city officials had partnered with the company earlier. Instead, the city government has had to track down hosts and make sure they pay on its own, which has been a challenge.

Of course, this still doesn’t address the awkward fact that short-term rentals of 30 days or less are illegal in most of Los Angeles. City officials are currently considering new legislation that would legalize and regulate short-term rentals. The proposed legislation would impose a 180-day annual cap for renting out a primary residence, and 15 days for other properties. It would also require hosts to pay lodging taxes and register with the city. Services like Airbnb would be required to turn over the names and addresses of hosts who fail to register and comply with regulations. That last point is sure to be controversial—in Airbnb’s hometown of San Francisco, the company has recently filed a lawsuit against the city for trying to fine it if it fails to enforce its registration requirement.

Airbnb’s new deal with Los Angeles to collect lodging taxes can still be amended or revoked if the city passes new regulations for short-term rentals, City Administrative Officer Miguel Santana told the LA Times. It’s also set to expire in three years.

Though Airbnb already works with many large cities like San Francisco and Paris, it has yet to strike similar tax collection deals with other likes Austin and New York City.