The conversation revolving around short-term rentals and sales tax collection continues in Homer.
The Homer City Council passed Resolution 24-056 at their last regular meeting on Monday, May 13, requesting that the Kenai Peninsula Borough Assembly pass an ordinance directing the borough’s finance department to coordinate with Airbnb regarding the direct collection of sales taxes on short-term rentals, or STRs, within the borough.
The City of Homer has attempted a few measures in past years to ensure the “equitable collection of sales tax” from short-term rental owners, including an effort at identifying and reaching out to owners of new and existing STRs appearing on Airbnb to ensure compliance, which has “proven challenging for City of Homer staff,” according to the resolution.
The proposed Ordinance 23-61(S), which aimed to require STR owners to register their businesses with the city including state business license and Kenai Peninsula Borough sales tax compliance, was voted down by the council in February.
According to a memorandum to the council by resolution sponsors Jason Davis and Donna Aderhold, Airbnb representatives attending the Alaska Municipal League meeting in December 2023 revealed that the company “was setting up arrangements with municipalities nationwide whereby Airbnb would collect local sales tax directly from customers at the time they made their purchase of a vacation rental. Airbnb would then remit the taxes directly to the municipal tax authority.”
By collecting and remitting sales tax directly themselves, Airbnb would relieve STR owners and operators who use the platform of the “burden” of tracking, collecting and remitting taxes. To start this process, however, Airbnb told Homer City Council members at the AML meeting that they would need “a copy of the municipal ordinance requiring collection of the tax.”
Resolution 24-056 thus requests the KPB Assembly to pass an ordinance directing the Finance Department to launch the coordination process with Airbnb.
According to the memo, the City of Homer receives sales tax through the KPB Sales Tax Division, which collects city sales tax from business owners for purchases made within the city, and through the Alaska Remote Sellers Sales Tax Commission, which collects city sales tax from Amazon and other online retailers for remote sales to customers who have Homer addresses. However, vacation rental platforms like Airbnb are not currently part of ARSSTC.
Resolution 24-056 also states that the borough and City of Homer “contribute a significant amount of funding” for ARSSTC to remotely collect sales tax. Airbnb would “provide a similar service” to the city and the borough at no cost.
In sponsoring this resolution, Davis and Aderhold hope that moving to a process in which Airbnb collects and remits sales tax themselves would “streamline the tax collection process, reducing administrative burdens on local hosts and ensuring a fair playing field for all visitor-hosting businesses in the City of Homer and the KPB.”
Resolution 24-056 was passed as part of the consent agenda during the May 13 meeting. No discussion on the resolution was held during the meeting.
Find the resolution in full at www.cityofhomer-ak.gov/citycouncil/city-council-regular-meeting-315.
The next Homer City Council meeting will take place on Tuesday, May 28 at 6 p.m. in the Homer City Hall Cowles Council Chambers.
