Airbnb enters tax agreement with Missouri, expected to generate $1.1 million

Airbnb has entered into a tax agreement with the Missouri Department of Revenue that is expected to generate $1.1 million.

The short-term rental company announced the agreement Wednesday. Effective Feb. 1, Airbnb will collect the state sales tax from guests (about 4.2%) and remit those funds on behalf of the hosts.

They will also collect a variety of local taxes on all Airbnb bookings in Missouri.

Ben Breit with Airbnb Midwest said it will be a little more expensive for guests but added that it’s “the right thing to do.”

“This is going to result in a ton of new revenue for the state,” Breit said.

The agreement with Missouri DOR only covers taxes assessed by the state. Cities or counties with their own separately assessed taxes must enter into their own agreement with Airbnb.

While Columbia was Missouri’s fourth-largest home-sharing market last year, the city currently does not allow short-term rentals to be taxed. In November, the Convention and Visitors Bureau brought the issue before the city council and requested a change in the definitions of hotel and motel so a lodging tax could be collected on online home rentals.

“We are obviously getting revenue in other ways but taxes are a missed opportunity,” Amy Schneider, Director of the Columbia Convention and Visitors Bureau said.

Columbia City Councilman Michael Trapp said they are now in the process of hearing from constituents. City officials have previously lamented Columbia’s declining sales tax revenue.

“We certainly need the revenue,” Trapp said, “So it’s something that we should consider but we want to make sure that everything is reasonable and we listen to the people involved.”

Breit said Airbnb wants the city of Columbia to benefit as much as possible from the growing short-term rental business.

“Changing that law and entering into a tax agreement will allow that to happen,” he said.