Hilton Head votes to join class action suit against Airbnb, VRBO. What we know
Airbnb and VRBO renters on Hilton Head Island need to pay their share.
That’s what town leaders, who voted Tuesday night to join a class action lawsuit against the short term rental companies, say makes renting on the island unfair.
The suit will argue that the platforms should assess accommodations taxes like hotels do. Those taxes paid by visitors help boost tourism development.
The vote came after the council discussed the potential litigation in executive session. The suit is being managed by Jesse Kirchner, a Charleston-based lawyer, and comes on the heels of a 2018 settlement in a similar case brought against Expedia, Travelocity and Priceline by eight South Carolina cities and counties.
Taking Airbnb and VRBO to court over accommodations taxes is a powerful move for coastal municipalities because the suit will argue that short-term rental owners need to add accommodations taxes when calculating the price for renters like hotels and other rentals do.
As more rentals pop up on the websites, town officials say the community is missing out on taxes that visitors should be paying when they stay there.
On Hilton Head, accommodations taxes add 1% to room costs. The state of South Carolina assesses a 5% state sales tax on rentals and a 2% state accommodations tax on hotels, rentals and campgrounds.
“At the end of the day everybody needs to pay their fair share,” Alex Brown, the Ward 1 representative on Hilton Head Town Council, told The Island Packet. “That A-TAX money is something we definitely depend on.”
If the lawsuit succeeds, the increased taxes would be brought back to the state and town. Hilton Head divides accommodations taxes to the Hilton Head Island-Bluffton Chamber of Commerce and makes the rest available in grants to organizations that serve and boost tourism on the island.
Town Council attorney Curtis Coltrane confirmed the town’s involvement in the litigation Tuesday night.
“(There was) a previous lawsuit that the town joined in dealing with online travel sites not paying A-TAX,” he said. “This is bringing up the same issue with Airbnb and VRBO.”
South Carolina leaders hinted that the issue would arise with the short-term rental companies in 2018 when the $4 million settlement was disbursed.
At the time, Myrtle Beach City Attorney Tom Ellenburg told the Sun News he was “currently looking at Airbnb (and) their requirements for accommodations tax,” but that he wasn’t ready to discuss the issue.
Accommodations taxes, also known as tourism taxes, are paid by visitors who stay overnight on the island. If they rent through a short term rental company or stay in a hotel, the taxes are applied to their bill. Airbnb and VRBO do not equally assess all of these taxes, according to town leaders joining the suit.
Some rentals are exempt from paying the taxes, including people who are renting out a room in their home if their home has fewer than six bedrooms or if the rental is of the same room to the same person for at least 90 continuous days, according to the S.C. Department of Revenue.
But on Hilton Head, where residential neighborhood property owners resent being inundated by 10-bedroom rental homes, the tax on individually hosted rentals could upset people who don’t use a professional listing service to handle rentals.
A call and email to Kirchner were not returned Wednesday.
This story was originally published April 8, 2021 at 1:29 PM.
