Bill would bring tax fairness to short-term rentals made popular by sites like Airbnb
Legislation Assembly Democrats Annette Quijano, Valerie Vainieri Huttle and Raj Mukherji sponsored to ensure fairness among all hospitality providers in New Jersey and provide a much-needed revenue boost to the state gained the approval of the General Assembly on Monday.
The bill (A-4587) would impose upon “transient accommodations,” or residences used as temporary lodging, the same taxes and fees that hotels and motels currently must pay to the state.
“Our laws need to be updated to keep up with changes brought about by new technology,” said Quijano (D-Union). “The fact that taxes are not paid for stays at locations rented through sites like Airbnb but are applied to stays in hotels is an unfair advantage that hurts the hospitality industry and takes funding away from municipalities for important programs. This bill levels the playing field and provides tax fairness for the entire hospitality industry in New Jersey.”
“We can’t allow rules to apply to one business but not another when they essentially provide the same service,” said Vainieri Huttle (D-Bergen). “Accommodations booked through sites like Airbnb are used like hotel rooms. They should be subject to the same obligation.”
“Online lodging marketplaces have allowed thousands of hosts in New Jersey to make extra income and have provided more short-term rental options to people from all over the country and the world who want to visit the Garden State, but the current system gives them an unfair advantage,” said Mukherji (D-Hudson). “Rather than penalizing the choice to stay in a hotel or motel, the state should ensure that everyone pays the same taxes for lodging.”
Under current law, the state imposes the sales and use tax and the hotel and motel occupancy fee on the rent for each occupancy of a room or rooms in a hotel. Further, current law authorizes municipalities to impose various taxes and fees, on the rent for each occupancy of a room or rooms in a hotel in those municipalities. However, there is no tax or fee imposed on short-term rentals.
The bill would impose the state sales and use tax, and the hotel and motel occupancy fee on these rentals and authorize municipalities to impose the following taxes and fees where applicable: the hotel occupancy fee, the Atlantic City luxury tax, the Atlantic City promotion fee, the Cape May County tourism sales tax, the Cape May County tourism assessment, the municipal occupancy tax, the sports and entertainment facility tax and the Meadowlands regional hotel use assessment.
Accommodations listed with a real estate agent or real estate broker licensed by the New Jersey Real Estate Commission would be exempt.
In order to facilitate the collection of the taxes and fees, the bill would allow the director of the Division of Taxation or the chief fiscal officer of a municipality to enter into an agreement with the owner or operator, or a transient space marketplace. Under the bill, the online marketplace would collect the taxes and forward the money to the state and municipalities, as applicable.
Under the bill, permanent residential rentals would continue to be exempt from the taxes and fees listed above. The bill also would exempt charitable, non-profit organizations from collecting the taxes and fees when providing transient accommodations in furtherance of the non-profit’s mission.
The bill, which the Assembly passed 46-28, awaits Senate consideration.