July 23, 2017

Questions as Mississippi seeks to tax online lodging rentals

Mississippi’s tax collector wants to make sure people renting rooms or vacation properties online pay sales and lodging taxes.

Some people, though, told Revenue Department officials at a Wednesday hearing that the department was overstepping its legal power, as well as not correctly following procedures for issuing new government rules.

At stake is whether Mississippi and local governments will collect tax from properties rented through services including Airbnb and VRBO, which stands for Vacation Rentals By Owner.

In tourist meccas nationwide, rental services have sparked opposition, with neighbors saying owners are running commercial businesses and driving up housing costs for residents. Many cities only allow short-term rentals with a special permit. There have been few such disputes in Mississippi, with the exception of the coastal city of Ocean Springs, which has capped short-term rentals at 35.

The move comes as the Revenue Department continues to consider a rule requiring large retailers to collect taxes on internet sales. Revenue Commissioner Herb Frierson has pledged to enact that rule by the end of the month, though he acknowledges it’s a challenge to U.S. Supreme Court decisions.

Revenue Department officials say the lodging rule is on firmer legal ground. The change, proposed in March, would clarify that […]

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