Perseverance past the automated system
Resort Tax becomes second taxing authority in the nation to be collecting taxes from VRBO/HomeAway
Big Sky Resort Area District (Resort Tax) is now the only taxing authority other than the state of Montana to be collecting taxes from VRBO/HomeShare International – in the nation.
It took real grit and hours on the phone from many interactions with VRBO’s automated system before they found success.
The process started in Oct. 2019 when Resort Tax began fielding calls from homeowners who were using VRBO to facilitate short-term rentals. The ability for them to create a custom tax field within the system was no longer available.
“At that point we realized something had changed and reached out to VRBO through a lot of phone calls, eventually getting through to a human voice, to understand what had changed,” Resort Tax regional manager Daniel Bierschwale said. “Basically the mechanics of what had happened was the state of Montana was in negotiations with VRBO/Home Away.”
The negotiations outlined that VRBO/HomeAway would collect the state bed tax and then remit the collected funds to the state, he explained.
“The changes that were made with the Montana bed tax had a trickle down impact on users in resort tax districts,” he said.
A conversation with the right person at the Montana Department of Revenue led them to the correct person at VRBO. Once in touch with the person who handles taxes with VRBO, they entered into an agreement, Bierschwale explained. Effective Jan. 1, VRBO began collecting resort tax on behalf of the owners.
“It took a lot more effort on our behalf than one would imagine to actually get to the finish line with VRBO,” he said.
Resort Tax finance and compliance manager Kristin Drain said that once the right person was found they were very helpful.
It is a huge win for Resort Tax, streamlining the process for at least one short-term rental company and removing a section of time consuming investigative work Drain has to undergo to make sure that listed homes are compliant with paying the 3% Resort Tax.
Typically, a program called LodgingRevs identifies short-term rentals in the district and from that Drain figures-out if the home is registered with Resort Tax. Airbnb and VRBO block direct communication with owners. So, she usually has to use literal leg work, drive around, identify the property by comparing a photo from the website to the home and finally track the homeowners and let them know that they need to pay Resort Tax.
Drain explained that the district currently has 240 individually managed short term rental properties and about 580 properties managed by property management companies for approximately 820 total properties. That number changes daily, she said. At this time, there are around 20 registered vacation rental management companies in operation, with each managing between 2 to 100 or more properties.
““The amount of time and energy that Kristin [Drain] would spend on trying to verify compliance of short term rentals is pretty exorbitant,” Bierschwale said.
“By signing this agreement with HomeAway/VRBO, our hope is that the resort tax collection process will be seamless for Big Sky’s short term rental owners while also ensuring 100% compliance,” Drain said. She explained that the goal of the district is to support tax collectors however possible and that the resort tax team is grateful to them for helping contribute to the Big Sky community through resort tax.
“We are hot on the trail of getting a similar arrangement with Airbnb,” Bierschwale said. “We’ll get them, eventually, but holy cow – there is a certain amount of perseverance that is and was required.”