Why the ‘fatal flaw’ in Airbnb is costing the company a fortune
By Simon HillThe US government on Wednesday issued a warning to Airbnb, warning that the company’s “fatal vulnerability” is allowing it to avoid billions of dollars in taxes and penalties, and potentially putting the lives of millions of Americans at risk.
In its letter, the US Department of Justice warned Airbnb that it is liable to billions of tax dollars if it fails to pay millions of dollars of taxes it owes on its operations in the US.
The letter also asks Airbnb to provide “all information” related to its operations and to “provide a copy of the Tax and Trade Compliance Act and related guidance to the IRS.”
The Department of Treasury, which oversees the US tax code, issued its first formal warning in the past month.
Last month, Treasury Secretary Steven Mnuchin told Congress that Airbnb has “a huge amount of money in escrow.”
“If you have a huge amount in escrows and haven’t paid your fair share, we may be able to force you to pay that money to us,” Mnuchin said.
“I think you’re going to have a tough time explaining why it’s so much money.”
Mnuchin told reporters that the government is not seeking to seize Airbnb’s assets, but is instead “looking at whether the company should pay the taxes it should owe.”
“We have to do what we have to to do to protect the taxpayers,” he said.
Mnuchins letter follows similar warnings from the US Treasury Department and the Department of the Treasury in May.
The department warned Airbnb in June that it was in violation of federal tax laws by not paying taxes on profits generated by the site.
“If Airbnb continues to operate at a loss, then it is possible that the US government could seize your assets and take them to a federal court and have your money held,” the letter said.
“We urge you to consider whether this is a good idea, or whether you have enough assets to protect your assets.”
The IRS said in May that it had “concerns” that the website could avoid paying taxes, but that it “did not take any enforcement action.”
The Treasury Department’s letter to Airbnb is the first official notice the agency has issued about the company in years.
The government’s warning comes just days after the Department Of Justice warned the company it faces billions in tax liabilities if it does not pay billions in penalties it owes.
Airbnb has been under fire since its founding in 2008, with its founders claiming it was a safe harbor for people to rent out their homes for short-term rentals.
However, the company has been criticized for failing to pay rent on homes rented out by its hosts.
Airbnb said last month that it would stop paying rent to hosts if it doesn’t receive a significant increase in revenue.
Airbnb declined to comment on Wednesday.
The company has also been under pressure to pay billions of more taxes due to the use of its platform.
Airbnb filed for bankruptcy protection last year.