Ulster County Comptroller March Gallagher has released a Short-Term Rental Tax Compliance Snapshot. The snapshot offers a follow up to the 2020 audit of occupancy tax collections from short-term rentals, which found that short-term rentals were not compliant with Ulster County occupancy tax requirements. As a result of the audit, Ulster County entered into a voluntary collection agreement with Airbnb to ensure that occupancy tax is collected electronically at the time of online booking and remitted by Airbnb to Ulster County monthly.
Ulster County contracts with third-party vendor Host Compliance, owned by Granicus, which researches potential short-term rentals and aggregates the information. In working with Host Compliance, the Comptroller’s Office was able to identify 948 short-term rental properties that are not compliant with Ulster County’s occupancy tax law. Of those, 852 properties had evidence of renting within the last year. Of those properties that had rented within the last year for which identification data was available, 63% of them had been first identified by Host Compliance over a year ago. Furthermore, 476 properties, or 58% of those that rented within the last year, had rentals within the last 30 days of the March 2023 analysis.
The total potential lost revenues are challenging to calculate. Properties that list on Airbnb already have taxes collected and remitted to the County, whether or not the property is registered with the County as an occupancy taxpayer. Nonetheless, if those properties also rent on other platforms such as VRBO, Red Key and others, the tax is not automatically collected. Furthermore, properties that do not rent through Airbnb have no automatic collection and must self-report all taxes owed. Host Compliance estimated that the 2022 lost revenues were at least $65,000 and could be as high as $1,060,000.
The Comptroller’s Office recommends that the work of compliance monitoring (that is pursuing properties to register with the County after identification) be outsourced to Host Compliance. This service is available for an additional annual fee of $38,000, which would be more than covered by capturing the forgone revenues.
“I want to thank Comptroller Gallagher for her team’s review of the short-term rental occupancy tax receipts and for sharing this information with us so we can continuously improve our processes,” Ulster County Executive Jen Metzger said. “Our Finance Department will work with our vendors to ensure that short-term rental properties are compliant with the law and Ulster County receives all of the tax dollars we are owed, because every additional tax dollar that comes from tourism revenues like the occupancy tax is one less dollar coming out of our residents’ property taxes.”
Actual total occupancy tax collections have increased 207% in the last decade from $1,182,178 in 2013 to $3,632,993 in 2022. This increase is a result of the voluntary collection agreement as well as increased visitation to Ulster County.