(TRENTON) – With more people using online marketplaces like Airbnb to book their vacation rentals, Assemblywomen Annette Quijano (D-Union) and Valerie Vainieri Huttle (D-Bergen) have introduced legislation to create parity among all short-term rental providers in the state, ensure they are all paying their fair share of taxes and provide a much needed revenue boost to the state.
“This is all about fairness,” said Quijano. “We are trying to stay on top of technological advances in business, and how they impact brick-and-mortar companies and our economy.”
“There is nothing fair about one company having to pay certain fees while another one that provides essentially the same service is exempt,” added Quijano. “This will ensure that all entities that are in the business of providing short-term rentals in New Jersey are paying their fair share of taxes, which is not only just, but will provide the state and local municipalities with much needed revenue, like the agreement that Airbnb has already made in Jersey City and Newark.”
“Home rental websites like Airbnb have changed the way people approach vacation rentals. This bill ensures that these rentals are subjected to the same financial obligations,” said Vainieri Huttle. “Not only is it the fair thing to do, but at a time when state funding is limited and towns must do more with less, the additional revenue that this would bring could help bridge some of those funding gaps.”
The bill (A-4048) would impose the same taxes and fees that hotels and motels must currently pay to the state, on short-term rentals made popular by online marketplaces like Airbnb.
Under current law, the state imposes a sales and use tax and a hotel and motel occupancy fee (at a rate of 7 percent and 5 percent, respectively) on hotel room rentals. Further, current law authorizes municipalities to impose a local hotel occupancy tax (with varying rates of up to 6 percent). Current law, however, does not impose the taxes and fees, or other similar taxes and fees, on short-term rentals for occupancies that occur in other types of real property.
The bill would impose the 7 percent sales and use tax, and a 5 percent transient accommodation fee on charges for short-term rentals rented through a transient space marketplace.
The bill would also authorize certain municipalities to impose a 3 percent transient accommodation tax on certain charges for providing space for the accommodation of transient guests.
The bill would limit the imposition of the taxes and fee to taxable space for accommodation of a transient guest that is provided by a person engaged in the business of providing space for accommodation. To be engaged in business, a person must be engaged in the business of providing space for accommodation to the public as a business activity through the placement of an advertisement, or the listing of the space for accommodation, with a transient space marketplace, and must have cumulative gross receipts from charges for providing space for accommodation to transient guests in this state in excess of $1,000 during the preceding four calendar quarters.
The bill would also allow the Director of the Division of Taxation to enter into an agreement with the owner or operator of a transient space marketplace for the purpose of collection and payment of the tax. Upon entering an agreement with the owner or operator of a transient space marketplace, the director may waive the responsibility of a person engaged in the business of providing space for accommodation to collect and pay the tax. The owner or operator of the transient space marketplace shall agree to be personally liable for the collection and payment of the fee on behalf of a person engaged in the business of providing space for accommodation.