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Tourism Zone Grapples with State Room Tax Changes

The Door County Tourism Zone Commission (DCTZC) is struggling with changes to room tax that were included in the 2017-19 biennial budget. But the commission is on an island when it comes to calling for change.

Now, their hope is to convince the multi-national corporations such as Airbnb and VRBO to change the way they report, a goal that no one on the commission is very optimistic about.

“This sounds like something that was working really well and they decided to screw it up,” said Bob Starr, commission member representing the City of Sturgeon Bay, of the state budget changes.

The problem is with reporting. Under the new state law, online lodging companies such as Airbnb and VRBO, which the state calls lodging marketplaces, are required to collect the relevant taxes from properties rented through their platforms. The lodging marketplaces pay the room tax to the DCTZC, which then distributes it to the Door County Visitor Bureau (DCVB) and the individual municipalities.

In order to distribute the room tax dollars to the correct municipalities, the DCTZC needs to know in which municipality each listing is located. Unfortunately, lodging marketplaces don’t keep that detailed reporting on their properties. Specifically, they report locations of their rentals based on zip codes, which rarely line up with municipal lines.

“[Lodging marketplaces] just want to send an aggregate check and be done with it,” said Kim Roberts, DCTZC administrator, on the companies’ unwillingness to change their reporting procedures.

The new state law requires the lodging marketplaces to comply with all local reporting requirements, but enforcing that could be difficult.

DCTZC legal counsel William Vande Castle said the commission may be able to require lodging marketplaces to report the same information the commission receives from the properties now, but he isn’t exactly sure.

Vande Castle added that the new state law does not provide any way for the commission to litigate delinquent renters.

“Who do we go after?” Vande Castle questioned rhetorically. “We’re going to sue John Doe who’s got a property through Airbnb and he’s going to claim Airbnb collected the taxes.”

Moving forward, the commission may change the room tax ordinance to be clearer on what reporting is required by its permit holders, including lodging marketplaces.

Roberts said the current ordinance does already require that, but is unsure if the lodging marketplaces will comply.

Door County is alone in their concern because almost all other areas in the state that collect room tax have not been getting any money from these lodging marketplaces.

“For a lot of communities that haven’t had the framework, that’s free money,” said Roberts. These communities are not as concerned about the loss of data on number of rooms, overnight stays and the location of rentals because, in the case of the City of Madison, they suddenly received a check from Airbnb and didn’t ask any further questions.

But some commission members believe that once other municipalities start realizing their lodging units are paying room tax dollars to another municipality, they may join in Door County’s pressure on lodging marketplaces.

Commission member Bill Weddig said once Ashwaubenon realizes that Airbnb rentals in the village, which shares the 54304 zip code with the City of Green Bay, are sending their room tax dollars to their bigger neighbor, they may speak up.

For now, the commission is going to see how reporting goes under the current ordinance. While the changes won’t result in a loss of room tax dollars, it could just mean a whole lot more work for Roberts in parsing out where those dollars should go.

“If they’re willing to work with us I think we can make it work,” Roberts said.

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