Short-term rental (STR) taxes like Transient Occupancy Tax (ToT) are a growing issue for many jurisdictions. As platforms like Airbnb and VRBO thrive, cities struggle with outdated tax collection systems, leading to heavy workloads, lost revenue and underfunded communities.
Many governments still rely on paper forms and PDFs, requiring taxpayers to mail checks or pay in cash. This slow and labor-intensive process causes errors, lost revenue and frustration. Without a centralized online system, tax offices struggle with tracking payments, leading to compliance gaps and missed collection opportunities.
A modernized platform also allows multiple people across departments access the same accurate, real-time data for streamlined operations and better coordination.
Some governments are hesitant to adopt automation or AI-powered systems, but many that have made the transition have seen improvements in STR tax collection. Manual processes, such as relying on spreadsheets and paper forms, often create administrative and enforcement challenges and make it difficult to track compliance. Without accurate, centralized data, uncollected taxes can quickly add up, leaving communities without critical funding. For property owners, such processes are cumbersome and discourage compliance and prompt payment.
Lawton, Oklahoma is one community that made the switch from paper forms to Rentalscape’s online Tax Payment Portal. By automating tax calculations, streamlining payments, and providing real-time reporting, the city significantly increased tax revenue while reducing administrative burdens. AI-powered analytics have also improved the ability to estimate STR revenues, giving jurisdictions better insight into short-term rental activity in their communities.
This transition not only improved compliance among short-term rental operators but also ensured that collected funds were accurately tracked and efficiently redistributed to support vital community programs and services.
Airbnb’s voluntary collection agreements (VCAs) may appear to offer local governments an STR tax solution, but real-world experience shows there are significant drawbacks. Using agreements that allow platforms like Airbnb to collect and remit taxes on behalf of hosts, VCAs sound convenient, but can end can ultimately create frustration for jurisdictions due to a lack of transparency.
Airbnb’s VCA only applies to properties listed on Airbnb. Properties rented through other platforms like Vrbo, Booking.com, or direct listings go unaccounted for, meaning jurisdictions may be collecting far less revenue than they should. The data provided alongside VCA payments also lacks transparency, making it difficult for jurisdictions to verify whether the correct amount is being collected or track where funds come from.
Without the ability to properly vet or investigate the payments, jurisdictions have no way to confirm they are receiving the full amount they are owed from taxpayers.
Cities often assume platforms are handling tax collection properly, only to find discrepancies later. Businesses may also falsely claim tax exemptions, leading to further revenue loss. These gaps result in underfunded community initiatives and missed revenue opportunities.
At Deckard Technologies, we’re committed to help you help your communities thrive through giving local governments best in business data and automation.
Rentalscape’s Tax Payment Portal streamlines the calculation, collection and payment of STR-related taxes such as ToTs. With automated tax calculations, flexible payment options and real-time reporting, local governments can improve efficiency and maximize revenue collection.
Whether you’re navigating STR taxes for the first time or looking to modernize outdated systems, we can help. Contact us today to learn how Rentalscape can simplify tax collection for your community.