Potential customers search Airbnb for short-term rentals in the Denver area. (BusinessDen file)
After losing a similar case in Boulder last year, Airbnb is now suing the state of Colorado and asking a judge to determine that it does not owe $10.5 million in unpaid taxes.
“Airbnb contests all amounts claimed due, including all taxes assessed and any new interest or penalties that may be added to such taxes,” the California company wrote last week.
Airbnb rental costs are itemized. There are charges set by hosts, such as the nightly rate and cleaning fees, and the charge set by Airbnb, which is called a guest or service fee.
Airbnb collects and pays taxes on the former — the nightly rental charge — but not on the guest fee. And that has been getting it in trouble with state and local governments here.
In 2023, Airbnb sued the City of Boulder after receiving a $500,000 bill for unpaid taxes on its guest fees. It lost that case the following summer and chose not to appeal the ruling.
“Airbnb’s guest fee is a part of the price paid for the leasing or rental of any dwelling unit,” Boulder District Judge Keith Collins decided. “(It) is accordingly subject to the tax.”
While that case was playing out, the Colorado Department of Revenue was conducting its own audit of Airbnb. It, too, determined the company should pay taxes on the guest fee. Last month, it mailed Airbnb a $10.5 million bill for unpaid sales and lodging taxes from 2018 to 2021, according to the company. Airbnb responded by suing CDOR on Sept. 18.
“No statute authorizes application of the taxes to the guest fee,” that lawsuit claims.
It will fall on Denver District Judge Ian Kellogg to determine whether that is true.
Airbnb’s lawyers are Mark Medina and Michelle Bush with Silverstein & Pomerantz, a tax law firm in Denver. CDOR will be represented by the Colorado Attorney General’s Office.
“The Department of Revenue does not comment on pending litigation,” a spokesman said.
Potential customers search Airbnb for short-term rentals in the Denver area. (BusinessDen file)
After losing a similar case in Boulder last year, Airbnb is now suing the state of Colorado and asking a judge to determine that it does not owe $10.5 million in unpaid taxes.
“Airbnb contests all amounts claimed due, including all taxes assessed and any new interest or penalties that may be added to such taxes,” the California company wrote last week.
Airbnb rental costs are itemized. There are charges set by hosts, such as the nightly rate and cleaning fees, and the charge set by Airbnb, which is called a guest or service fee.
Airbnb collects and pays taxes on the former — the nightly rental charge — but not on the guest fee. And that has been getting it in trouble with state and local governments here.
In 2023, Airbnb sued the City of Boulder after receiving a $500,000 bill for unpaid taxes on its guest fees. It lost that case the following summer and chose not to appeal the ruling.
“Airbnb’s guest fee is a part of the price paid for the leasing or rental of any dwelling unit,” Boulder District Judge Keith Collins decided. “(It) is accordingly subject to the tax.”
While that case was playing out, the Colorado Department of Revenue was conducting its own audit of Airbnb. It, too, determined the company should pay taxes on the guest fee. Last month, it mailed Airbnb a $10.5 million bill for unpaid sales and lodging taxes from 2018 to 2021, according to the company. Airbnb responded by suing CDOR on Sept. 18.
“No statute authorizes application of the taxes to the guest fee,” that lawsuit claims.
It will fall on Denver District Judge Ian Kellogg to determine whether that is true.
Airbnb’s lawyers are Mark Medina and Michelle Bush with Silverstein & Pomerantz, a tax law firm in Denver. CDOR will be represented by the Colorado Attorney General’s Office.
“The Department of Revenue does not comment on pending litigation,” a spokesman said.
