Westmoreland hopes to have third-party rental sites collect occupancy tax
Pennsylvania lawmakers are working to make taxes on sites such as Airbnb, VRBO and HomeAway easier to collect by putting the pressure on companies rather than property owners.
But it’s an issue Westmoreland County is still trying to solve.
Between the state and county, people who rent out their homes, apartments or rooms are required to pay two different taxes — a 6 percent state occupancy tax and a 5 percent county occupancy tax.
The state tax is collected by the rental companies, which then send a check to state officials, thanks to recently changed legislation. The county tax, though, is collected by property owners, who send it to county officials.
The 5 percent county tax, which started in 2002, brought in $2.1 million last year. But when it comes to third-party rental sites, the tax poses a problem for officials, county Treasurer Jared Squires said.
Property owners who rent rooms are required to apply for a license with the Treasurer’s Office, making them eligible to pay the tax. But the office has no way of keeping track of people who rent out their homes other than logging into a website such as Airbnb and searching for Westmoreland County rentals.
“It’s one thing to send an employee to a hotel or motel,” Squires said. “It’s another thing to send my employee to someone’s house in the middle of the day to look at their books.”
According to Squires, county commissioners are trying to work out a contract with rental site operators to have them collect and remit the tax, a conversation that could last through the year.
The state tax has pertained to hotels, motels and bed-and-breakfast businesses for years. It was first applied to third-party rental sites in 2016, when Airbnb — a homesharing site — negotiated a deal with the state .
On Jan. 22, changes went into effect for the state tax , requiring companies to collect the tax and send a check to the state every month, something Allegheny County and Philadelphia have allowed companies to do since 2016.
“The intent of the new legislation is to create a level playing field for all booking agents doing business in Pennsylvania,” said Jeffrey Johnson, communication director for the Pennsylvania Department of Revenue.
The revised legislation also applies the tax to accommodation fees — additional charges added to the nightly rate of a room, which makes the tax receipts applicable for the state’s Tourism Promotion Fund.
Counties do not see money from the state occupancy tax, Squires said.
“These taxes are very common on hotels across the United States,” said Rob Stephens, founder of Avalara, a tax company that works with third-party rental agencies. “This kind of tax has always been on the books.”
The new legislation won’t affect how Tom Mizikar has been paying his taxes on this rental property.
Mizikar, who owns Beechwood Cottage in Laughlintown with his wife, said he is diligent about keeping books and paying both taxes.
“We compete against hotels, so if they have to pay it, anybody producing those services should,” Mizikar said. “It doesn’t affect us one way or another. It’s a little extra bookkeeping.”
But it’s frustrating when people don’t pay the county tax, Mizikar said, adding that it’s easy to call the county to figure out how the tax works.
According to Ann Nemanic, executive director of the Laurel Highlands Visitors Bureau, the county tax does help with advertising to potential tourists and tourism-related capital projects.
“The increase in these figures allowed for the biggest grant awards in the history of the (annual Westmoreland County Tourism Grant) program and allowed the bureau to increase our marketing efforts in major metropolitan areas of Washington, D.C., Cleveland, Columbus and Baltimore,” Nemanic said. “The result — longer stays equating to more hotel revenue generated.”
Nemanic said while Airbnbs are part of the lodging picture, they are “a much smaller part of the equation when compared to limited and full-service hotels and our resort properties.”
Liz DeBold Fusco, Airbnb spokeswoman, said the company has 100 hosts in Westmoreland County.
“We are proud to continue to work to simplify the tax collection process for the middle-class Pennsylvanians who share their homes to make some extra income, while ensuring the Keystone State can benefit from additional tax revenue,” she said.
Megan Tomasic is a Tribune-Review staff writer. You can contact Megan at 724-850-1203, [email protected] or via Twitter @MeganTomasic.