You’ve heard the stories or maybe lived the nightmare of having an Airbnb next door. Now, data shows 94% of Airbnbs or short-term rentals in Arizona are unlicensed and operating illegally.
Arizona law (ARS 42-5042) requires all operators of Airbnbs or STRs to have a Transaction Privilege Tax or “TPT” license (basically a sales tax number) before they can offer a unit for rent, and the TPT license must appear in all listings or ads for the property.
The TPT number is how the State collects “bed taxes”, allocates revenue to cities and towns and keeps track of STR activity. Crucially, revoking an operator’s TPT is currently the only way for the State to enforce the few regulations that apply to Airbnbs and other STRs. Without a TPT there can be no enforcement for bad Airbnb operators.
A check of Arizona Department of Revenue’s (AZDOR) Annual Report confirms that unlicensed, illegal STR operators are rampant. It shows that only about 3,100 TPT numbers have been issued for the 49,884 Short Term Rentals in Arizona that are currently offered online. That’s only 6%, meaning 94% of Airbnbs or STRs are unlicensed and illegal.
Then a survey looked at 100 Airbnb listings in Arizona that were selected at random and found that only 7 included the required TPT number. (Anyone can do their own survey by clicking on Airbnb listings and trying to find the eight-digit TPT number that should appear in the property description section.) Every listing that doesn’t show their TPT number is operating illegally.
That’s 94% of STRs are unlicensed and illegal, and 93% of Airbnbs are illegal due to missing tax information. Surprisingly, listings from “Superhosts”, supposedly the best of the best on Airbnb, had compliance rates that were even worse than regular hosts.
Having over 90% of Airbnbs operating illegally raises so many questions. Why is there no enforcement? How can the State collect taxes properly? (Some platforms collect TPT taxes when booking, but many do not, and “direct bookings” by operators are a huge tax compliance loophole.) How can we know what Airbnb and STRs are doing to the State if we don’t even know where they are or how many? How can we stop bad operators if they don’t even have a license in the first place? The entire framework for STRs in Arizona is a complete disgrace and invites abuse.
Of course, the biggest question is: Why won’t State Legislators fix this grotesque mess that they’ve made?
The solution to these illegal operations is dirt simple. Verify all listings. Hundreds of markets already require “verified listings”, that is, listings cannot even be posted online until the platform (like Airbnb) verifies the operator is properly licensed and registered. It is Airbnb’s corporate policy, as tweeted by CEO Brian Chesky three years ago that Airbnb will verify 100% of listings. They already do verified listings in hundreds of other markets. This would be an easy, quick, cheap, effective fix. Why isn’t Airbnb doing this for Arizona? Why aren’t our lawmakers requiring it?
The problem with Airbnbs is not a “few bad apples” as the industry claims. The truth is there are barely a few good apples and the vast majority are illegal, scofflaw operators that are ripping off Arizona and ruining our neighborhoods. Solutions are easy. We just need legislators that work to protect the citizens of Arizona instead of Silicon Valley billionaires that are strip mining our State with illegal operations.
Bill Hunter is a “snowbird” resident of Paradise Valley and has been working with Neighbors Not Nightmares to preserve quiet, safe neighborhoods in Arizona.