Manatee County, located in Florida along the Gulf of Mexico, draws many tourists with famous attractions such as Longboat Key, Bradenton Beach, and Anna Maria Island. The coastal region also serves as a second home for quite a few people, and it lends itself well to a significant short term rental marketplace. In order to pay for the marketing that promotes the region as a tourist destination, a Tourism Development Tax (TDT) is collected from STR operators by the Manatee County Tax Collector. In 2018, the Tax Collector collected $14.7 million in TDT, with $9.7 million of it coming from short term rental hosting platforms and individual properties – a $2.7 million increase from only 3 years ago.
The Manatee County Tax Collector contracted with Harmari STR to identify non-compliant taxpayers who were actively renting out short term rentals but had not been remitting their share of TDT. After an on-site meeting to review the taxpayer database, Harmari STR zeroed in on about 200 STRs that had a very high likelihood of being non-registered. After further review, Harmari STR confirmed that 46 of those properties were non-registered, resulting in a 22% discovery rate. As far as tax discovery programs go, this was terrific progress!
The Manatee County Tax Collector’s database contained over 12,000 active accounts, which was actually more than the 9,500 STR listings on the top 4 STR listing platforms (Airbnb, HomeAway, Flipkey and Booking). Usually it’s the other way around, with the number of listings on the STR platforms being greater than the number of accounts registered with a municipality. This “inverted” ratio makes it very difficult to find actual non-compliant taxpayers. The county had also done its own diligent work finding any “low-hanging fruit”: its records were well-maintained and up to date; the Manatee County Tax Collector kept strict tabs on how much they received from whom and for what date range; and STR operators were required to file their TDT return through their County’s website and remit their payments every month. The only remaining non-compliant STRs would be very tricky to find.
The Tax Collector was already at an “inverted” compliance, with more accounts than unique listings. That means taxpayers were already +95% compliant
Breckenridge is a big, well-known ski town that has successfully maintained its home-town feeling. Thanks to years of effort by its finance department, Breckenridge independently obtained over 3,700 active STR licensees remitting lodging tax to the Town, putting it solidly in the Endgame. It presented a challenging circumstance to anyone seeking out any remaining unregistered STRs.
Using our methods, however,Harmari STR successfully mined 129 Unregistered STRs, compared to only 20 found by a competitor.
Harmari STR was ready to give Manatee County the same results. Rather than quote an inverted compliance ratio, we simply assumed that over 95% of STR operators were in tax compliance, and then we got to work.
In the Endgame stage, a critical task is cross-checking online listings against an active taxpayer account.
The first step of cross-checking is to map how close an STR listing is to an active account. Both the address and the account are geo-tagged and the distance between them is measured. The closer the account is to the listing, the higher the distance score will be. To find unregistered listings, you actually want the opposite: a low score that ensures no registered listings are nearby.
Secondly, we match up other critical metadata to the listing, such as operator name, bedroom count, property type, and more to eliminate any active accounts before scoring any given STR listing as possibly non-registered. For example, if Jane Doe owns and operates the STR at 123 Main Street, we make sure there’s no active account associated with Jane Doe at that address.
We then sort the list by the highest probability of being unregistered and deliver that list to the Tax Collector. The Tax Collector staff verifies the information, including supporting evidence, and then sends an outreach letter to the taxpayer. Through tracking the compliance history, each month we produce a report of new leads for the Tax Collector and filter out the already-checked listings from the last month. This ensures minimal duplicated effort to verify each lead and allows the Tax Collector to focus only on new non-compliant listings.
In this way we were able to uncover 46 non-registered properties for Manatee County. It takes very precise technology to maintain a 22% discovery rate on STR leads over 9,500 listings. Our team of trained software developers, experienced compliance analysts and quality assurance staff are hard at work behind the scenes making sure the best quality data and supporting evidence is provided to our customers.
Contact Us to learn more about how Harmari can help in the Endgame Stage of Short Term Rental Compliance