Two years after Los Angeles warned Airbnb hosts of their tax-collecting obligations, the city and the short-term rental company have reached a deal in which the business will start collecting millions of dollars in lodging taxes from hosts. 

The Los Angeles Times reports that Airbnb will help hosts who rent out room or entire residences for short stays to pay a 14% tourist tax on those stays, essentially bringing them into compliance with existing city laws.

Under the system, which starts in August, Airbnb will collect the taxes from hosts and hand them over to the city.

“The hosts are required to pay that tax,” City Administrative Officer Miguel Santana, said. “We’re simply creating a mechanism to facilitate that.”

A spokesperson for Airbnb tells the Times that the company’s “community of hosts want to pay their fair share and want to help” the city.

Airbnb estimates that collecting such taxes from hosts could bring more than $20 million in revenue to the city, which could then be used for local programs and other initiatives.

The Times reports that city officials already budgeted to receive $5 million in taxes from rental hosts this year.

Under the agreement, the city can audit the tax payments, by assigning each host an anonymous number, the Times reports, noting that the city can’t pursue hosts for lodging taxes they failed to pay in the past.

The city discussed working out a tax agreement with the company last year, but tabled the idea over fear doing so would legitimize illegal short-term renting.

But after the city council approved a budget this year that called on finance officials to iron out regulations with Airbnb, negotiations began.

Santana cautioned that even though the city will accept lodging taxes from Airbnb hosts, it doesn’t mean certain rentals are now legal.

The Times notes that it is illegal in Los Angeles to rent a home for less than 30 days at a time. However, the city proposed legislation that would legalize and regulate the short-term rentals.

“There is going to be a lot of debate about how this industry is regulated,” Santana said. “We just want to make sure that while that conversation is taking place, the city is not missing out on millions of dollars in revenues.”

Airbnb strikes deal with L.A. to collect millions in lodging taxes [The Los Angeles Times]

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