"I didn't know" will no longer be an excuse for local Airbnb owners.
Valid or not, that is likely the excuse the 85 percent of short-term vacation rental owners who haven't been paying Hamilton County's 4 percent lodging tax would give for not paying the government its fair share.
Recently, though, the office of the Hamilton County trustee reached an agreement with Airbnb that will allow the short-term rental website to collect the tax from its operators. The city of Chattanooga reached a similar agreement with the company in January.
Rental collections, according to Trustee Bill Hullander, could rise from $90,000 a year to nearly $7 million.
"I didn't know," according to a 2016 survey by the National Association for the Self-Employed, was the reason 34 percent of sharing economy participants gave for not knowing they needed to pay taxes. In addition, 36 percent didn't understand what records they needed to keep for tax purposes, 43 percent didn't set aside money to meet those obligations or know how much they owed, and 69 percent didn't receive any tax information from the platform - like Airbnb - that they used to earn their income.
Last December, when the trustee's office announced it was on the case of finding the nonpaying hosts, a deputy clerk in the office said about 40 hosts who weren't paying had been identified over the past year and guessed about 75 percent of hosts altogether weren't paying. The reality was that another 10 percent more weren't.
At the time, Airbnb handled the taxes for hosts in about 340 jurisdictions.
According to the agreement, the county will get about $600,000 from Airbnb per month but will not be given the names and addresses of those who are paying the tax.
Hullander hopes that will cause the scofflaws - and the "I didn't knows" - to come clean and register with his office. After all, each separate Airbnb host in the county also needs a business license. Currently, if the office determines someone is operating a short-term rental without a license, the host is warned and then is fined $50 a day if they are late with their tax payment.
The tax collection windfall for the county will put another $240,000 or so into the coffers of the Chattanooga Area Convention and Visitors Bureau, per a longstanding agreement with the county over hotel/motel taxes. We hope this will prompt the Hamilton County Commission to take another look at whether the tourism bureau - which already operates on more money than many other cities our size - should continue to get all the hotel/motel tax money or whether a portion of it ought to be used for other county expenditures.
We have long said how much we admire start-ups such as Airbnb and Uber for using digital technology to shake up the business models in their fields, but those businesses also must play by the rules. That makes it fairer for everybody.