Airbnb, the home-sharing company, announced that it has cut a deal with the state of Tennessee to collect state taxes from customers. One of the challenges of nontraditional ways of delivering goods and services is giving governments their necessary revenue. No business wants to give up too much profit to regulations and taxes, but most people recognize the vital role those things play in the government’s task of promoting the common good.
One of the purposes of a start-up or a similar type of firm is to cut down on overhead. Also, goods and services are exchanged quickly. The business is mobile; it adapts quickly to circumstances and customer needs. In this case, it serves both the firm and the customer for all applicable taxes to be paid to, and collected by, one party. The only problem here is that a municipal hotel/motel tax is not included in the deal. This fee must be added to the price. Since some taxes go to the state, and some to the relevant municipalities, customers are being taxed separately twice. No easy solution–beyond sellers “eating” the hotel/motel fee–appears forthcoming.
Cities may continue experimenting with innovative ways to regulate the new industry. Surely the appearance of new firms will help to standardize procedures related to taxes and fees. Technology and the resulting interconnectedness is speeding up the time it takes for economic relationships to form. Elected officials and regulators must adjust as well.
If you have formed a business in this fast-paced high-tech economy, there are no doubt questions and concerns about meeting obligations with respect to the government, taxes, and other potential problems. Burkhalter & Burkhalter understands your challenges, and we have the knowledge to help you meet whatever is coming. Experienced Tennessee tax attorneys and CPAs with years of experience, we’re ready to connect you with your customers. Call today for a consultation.