VRBOs Not Paying Taxes Creates Competitive Disadvantage for VRMs

When VRBOs don't pay transient occupancy taxes on their vacation rentals, they can often rent their vacation home out for a lower price, which often creates a competitive disadvantage for professional vacation rental managers and even other VRBOs who follow the law.

Last Friday, The Desert Sun newspaper of Palm Springs released the latest in what seems like a string of articles nationwide about local governments cracking down on individuals operating vacation rentals and not paying taxes. Similar issues have already been raised in Colorado, Tennessee, Florida, North Carolina and more.

But this issue goes much farther than cities collecting the taxes due to them; it goes straight to the heart of a competitive advantage these tax evaders have over vacation rental managers that pay taxes.

Palm Springs Mayor Steve Pougnet told the Desert Sun that the effort wasn’t just about raising revenue from TOT (transient occupancy tax) funds.

“It levels the playing field for rental agencies and hotels,” he said. “It gives the city oversight over who is renting the property and how it's being managed.”

Professional vacation rental managers (VRMs) in the area know this situation all too well.

Jim Pearce, who manages 200 properties as the owner and operator of Fairway Vacation Rentals in Palm Springs, told the Desert Sun that individuals who don’t pay the tax can undercut the prices offered by legitimate management companies that do pay taxes.

Another manager, Mike McLean of McLean Company rentals, told the Desert Sun that he operates at a “distinct disadvantage.”

“It's very competitive out there,'' he told the Sun. “We're all chasing the same travelers.”

Oversight Another Issue

In addition to the competitive disadvantage the situation creates for many legitimate vacation rental managers, the lack of oversight created by the issue may be actively contributing to yet another issue facing vacation rentals across the United States. Many cities nationwide are actively trying to increase regulations on vacation rentals, arguing that they lead to noise complaints and pollution, and can bring down home values, among other things.

Professional vacation rental managers counter the argument by contending that much of problem is coming from a few bad apples that rent out their property without properly establishing a code of conduct for renters and rarely check in on the guests using their vacation homes. Many VRMs strongly promote a good neighbor policy. And, they further argue that their guests actively contribute to the local economy through their patronage of local businesses while on vacation.

Further oversight on the part of the cities may help quell some of the issues surrounding trouble-causing vacation homes and the individuals who manage them. Conversely, outright regulations or even bans on vacation home rentals will likely hurt only the legitimate business and the local economy, and not those operators that “fly under the radar,” which are more likely to continue their practices despite regulations.

Support VRMs

LiveRez actively supports VRMs. In fact, the company has chosen to work exclusively with them because it feels that VRMs offer guests a more secure and consistently positive experience. If you’re looking to rent from a professional vacation rental manager that meets LiveRez’s stringent code of conduct, you should visit RezSecure.com – Trusted Vacation Rentals. Trusted Vacation Managers.

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LiveRez is the fastest growing vacation rental software provider for professional vacation rental managers. The company’s cloud-based, end-to-end platform offers fully integrated solutions for reservation management, trust accounting and online marketing, with high-ranking, high-conversion dynamic websites and an extensive affiliate marketing program. The company is a proud Gold Sponsor of the Vacation Rental Manager’s Association (VRMA).

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