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Los Angeles Strikes a Deal to Collect Hotel Taxes From Airbnb Hosts

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The deal doesn’t make the rentals legal, but it does make the city money

It’s been a struggle for Los Angeles officials to make sure Airbnb hosts and other short-term rental hosts are paying the same taxes that hotels pay. But a new deal between Airbnb and the city will make that a lot easier. In a move expected to generate millions of dollars for the city, Airbnb has agreed to collect lodging taxes from its hosts directly and pass them on to the city, the Los Angeles Times reports.

"Our community of hosts want to pay their fair share and we want to help," Airbnb's Public Policy Manager for SoCal said in a statement. "These agreements allow cities to rightfully benefit in the economic impact of home sharing while also making it easier for Airbnb hosts."

The deal, announced Monday, is likely to impact thousands of hosts citywide who will have to start paying the 14 percent tax. Airbnb estimated there were about 12,270 active hosts in Los Angeles last year, and the city anticipates collecting $5 million in taxes. That's a lot less than a previous estimate from Airbnb, which ballparked the figure last year at $20 million.

So it can audit the tax payments, the city will assign each host an anonymous number

The deal does not, according to the Times, prevent the city from going after hosts who failed to pay taxes prior to the agreement.

It also does not make these rentals legal now, says City Administrative Officer Miguel Santana. That’s a whole other matter entirely. The agreement is set to expire in three years, and can be adjusted or eliminated based on whatever new regulations the City Council puts in place.

"There is going to be a lot of debate about how this industry is regulated," Santana says. "We just want to make sure that while that conversation is taking place, the city is not missing out on millions of dollars in revenues."

Los Angeles is embroiled in a heated debate about how to regulate and legalize the explosively popular short-term rental market. The proposal would place limits on how often short-term rental units could be let out, set restrictions on what kind of units could qualify as short-term rentals (no tents, trailers), and require all rental hosts to register with the city.