Software helps get tough on bed tax

MALONE — Franklin County legislators are putting short-term rental owners on notice to pay their room tax, or else. A resolution passed by the legislature Thursday will pave the way for a data company to find short-term rentals and get the property owners to pay.

New software purchased by the Regional Office of Sustainable Tourism (ROOST) will enable county officials to track down people who offer short-term rentals and don’t pay taxes on that income. Hotel and motel owners, as well as traditional bed and breakfasts, pay a percentage of the rental fee to the county in Franklin and Essex counties. Although room taxes originally applied to commercial rentals such as hotels and B&Bs, online short-term rentals such as Airbnb are taking an ever-larger share of the market.

In 2016, the Franklin County treasurer entered an agreement with Airbnb to allows that company to collect the room tax, but several of the legislators said not every rental agency is complying.

Airbnb hosts are directed to pay 3 percent of the room price to Essex County, and 5 percent in Franklin County. Hamilton County has no occupancy tax.

Essex County Treasurer Mike Diskin said last month the county took in $14,000 from the occupancy tax from Airbnb and typically receives around $10,000 from Airbnb each month. That company, said Diskin, sought these agreements with municipalities voluntarily.

“Airbnb was willing to do it,” he said. “They build it right into what they collect from you.”

However, there are other less well-known short-term rental organizations, such as FlipKey and VRBO (Vacation Rental By Owner) that fly “under the radar,” said Diskin.

The room tax is used to support the county’s tourism promotion efforts.

Bill Farber, chairman of the Hamilton County Board Of Supervisors, said that the money counties with room taxes can invest in marketing helps not only the lodging industry, but ancillary businesses. In Hamilton County, where officials are losing cabin space to the second home market, “being a day-trip economy is not a successful model,” said Farber.

“It may be a tool we inadvertently left out of the tool-box,” he said. Although Hamilton County has no room tax yet, Farber said it is looking at neighboring counties’ success and wondering if the room tax would help boost tourism.

In the end, the responsibility for making sure the tax is paid rests with the property owner. According to the occupancy tax law passed by the Franklin County legislature in 2015, “to prevent evasion of the tax, it shall be presumed that all rents are subject to tax unless the contrary is established, and the burden of providing that a rent is not taxable shall be upon the operator or occupant.”

In Thursday’s meeting of the county board, Tupper Lake Legislator Paul Maroun said, “If you haven’t registered already, contact the treasurer and we’ll get you in the system. If we have to come out and find you, we’ll do what we have to do to make sure you’re paying the bed tax.

“People in my district are concerned that they’re paying the tax and others aren’t paying,” said Maroun.

Barb Rice, chair of the county legislature and Saranac Lake’s representative, said, “It’s very important we be proactive in this area. It really is not fair when some people are paying the tax and others do not.”

Director of the Franklin County Office of Economic Development Russ Kinyon said his agency had found a company, Bear Cloud Software, that sells and supports a software system that monitors the short-term rental listing sites and gathers information on the properties listed and their owners. The software system also offers a property registration system to assist short-term rental owners to easily pay the occupancy tax.

Each county in ROOST’s tri-county area — Franklin, Essex and Hamilton — will have a user account separate from the others’.

Kinyon asked the Franklin County legislature to pass a resolution in support of ROOST’s contracting with Bear Cloud Software, and said the details will be worked out before the legislature’s next meeting on Dec. 21. The resolution passed.