Indiana legislators study short-term residential rentals

INDIANAPOLIS (WISH) — A group of Indiana lawmakers on Thursday were back at the Statehouse as part of a summer study focused on short-term rentals. 

Earlier this year, Gov. Eric Holcomb signed a bill into law that states homeowners can offer their home up for rent online on short-term rental platforms like Airbnb, VRBO or HomeAway. 

Lawmakers are trying to figure out if platforms like Airbnb should collect state taxes from homeowners, or whether homeowners should pay the taxes directly to the state.

“Who would have thought about renting out a room in your house 10 years ago, 15 years ago? Now, it’s very commonplace,” said State Rep. Tim Brown, a Republican from Crawfordsville who chairs the committee conducting the study. 

Now lawmakers must determine how the rentals will be taxed.

“We need to make sure people know, if they rent out their home, that they’re responsible for these taxes,” said State Sen. Karen Tallian, a committee member and Democrat from Portage.

Brown, who serves as the chairman of the Interim Study on Fiscal Policy Committee, said under current law, it’s the homeowner’s responsibility to pay taxes: both the sales tax on the transaction and an innkeepers’ or hotel/motel tax.

Brown said so far that process has not been followed often in connection to the short-term rentals.

“The argument is they probably are not. I would think there probably are homeowners that aren’t doing it because they just don’t know,” Brown said.

One question the committee was considering on Thursday: Does a system even physically exist for companies like HomeAway to collect those taxes?

“They’re aggregating a lot of the data; they’re aggregating kind of the contact points for the consumer. Would that be an added expense?” Brown said.

“While it may be easier for some of them to collect and remit the money, it’s harder for others, because they don’t process the payment or may not know when a transaction occurred. Simply mandating they collect and remit a tax is not a solution to the problem. It’s not a one-size-fits-all scenario,” said Matthew Kiessling, vice president of short-term rental policy for The Travel Technology Association (Travel Tech).

Kiessling represents travel companies that include Airbnb, VRBO, HomeAway, Kayak, Priceline, Orbitz, Booking.com, Hotwire, Trivago, TripAdvisor and Travelocity. 

“We think if you’re renting your home or offering your home as a short-term rental, then you should be responsible for collecting or remitting the proper sales or occupancy tax,” Kiessling said.

Brown said the discussion at the summer study is far from over.

The next committee meeting is Sept. 20.