Suffolk turns to A.I. to collect hotel-motel taxes from Airbnbs
Airbnb host Alyson Chadwick at her home in Stony Brook in May. Credit: Newsday/John Paraskevas
Alyson Chadwick's one-bedroom apartment overlooking Stony Brook’s West Meadow Creek, listed for less than $100 per night through Airbnb, provides her extra income and offers affordable lodging in a village with few hotels.
The hundreds of dollars she pays each year to comply with Suffolk County's 5.5% per night hotel-motel tax is "just something you have to do,” she said. “My property taxes are high too, but I don't not pay them.”
Not many other home-share hosts in Suffolk are doing the same, according to analysts the county has contracted with to try to collect more taxes through artificial intelligence.
Their software program, administered by international government software provider Granicus, uses a combination of AI and company employees to find people who rent homes on Airbnb and other websites and notify them of the tax, which nearly doubled this year.
The county's “Host Compliance" short-term rental program launches June 12.
“It's cutting-edge software, allowing us to collect revenues that we are owed," said county planning and environment Commissioner Sarah Lansdale.
Suffolk County Comptroller John Kennedy said he's skeptical it will generate the money Granicus estimates it will.
“I think that it is naive to suspect that all of a sudden another $10 million is just going to flow through the door,” he said.
The software extracts data from dozens of home-share sites and combines it “with some artificial intelligence, machine learning and also human analysts” to determine how many homes are on the market and where, a Granicus representative said.
“We can leverage that information, get close to what we think is where that property is located and then have humans go through and validate if this is actually the short-term rental,” said Graeme Dempster, Granicus’ product director for North America.
The software can take images from listing photos and identify the properties through data from publicly available websites such as Google maps. It also checks calendars and guest reviews to determine when a home was rented. Those findings are confirmed by employees, and property owners are notified that they need to comply with the law.
“By having that process automated, it alleviates the burden on county staff to go out and uncover where the short-term rentals are located,” Dempster said.
Dempster said it would take the equivalent of about 70 full-time employees to do the work Granicus will perform.
The cost of the software is about $270,000 per year, according to Suffolk officials. Newsday has submitted a Freedom of Information Law request for the contract terms.
Airbnb, which Granicus estimates accounts for 40% of home shares in the county, said in a statement it had “long advocated for a centralized statewide tax collection system to simplify the collection process for jurisdictions across the state and ensure they receive their fair share of revenue.”
On June 1, Suffolk's hotel-motel tax rose from 3% to 5.5.%.
The tax, levied in addition to Suffolk’s 8.63% sales tax, historically has been used to fund cultural institutions and promote tourism. Revenue generated by the increase will partially support the planning and infrastructure surrounding a proposed Ronkonkoma convention center. It also will fund an increase in county spending for Long Island’s tourism promotion agency, Discover Long Island, from $2 million to $6 million.
Homeowners always have been required to register with the county comptroller’s office to pay the tax, county officials said. Those who refuse to report their earnings face a penalty of up to $1,000 or one year in jail, plus penalties and interest on taxes.
The county collected about $127,000 in penalties and interest in 2022, according to data from the comptroller's office.
Fewer than 10% of county hosts pay their share of taxes, Dempster said. Kennedy said he could not confirm that estimate.
Kennedy said hotel-motel tax revenues fluctuate from year to year, with $10.9 million collected in 2021 and $14.2 million in 2022.
Dempster said his firm has identified about 7,500 Suffolk short-term rentals with an $802 median nightly rate, which could generate $9 to $12 million in additional tax revenue. The properties advertised for rent include luxury homes in the Hamptons.
Kennedy, whose office has tried to enforce payment of the tax since 2016, questioned whether the program would increase enforcement.
He said his staffers have worked for years to bring people into compliance, sometimes by knocking on their doors to inform them of the law.
Alyson Chadwick's one-bedroom apartment overlooking Stony Brook’s West Meadow Creek, listed for less than $100 per night through Airbnb, provides her extra income and offers affordable lodging in a village with few hotels.
The hundreds of dollars she pays each year to comply with Suffolk County's 5.5% per night hotel-motel tax is "just something you have to do,” she said. “My property taxes are high too, but I don't not pay them.”
Not many other home-share hosts in Suffolk are doing the same, according to analysts the county has contracted with to try to collect more taxes through artificial intelligence.
Their software program, administered by international government software provider Granicus, uses a combination of AI and company employees to find people who rent homes on Airbnb and other websites and notify them of the tax, which nearly doubled this year.
WHAT TO KNOW
- Suffolk County is contracting with government software provider Granicus to try to enforce short-term rental owners to pay the county's hotel-motel tax.
- The tax rose June 1 from 3% to 5.5%.
- The software uses AI and Granicus employees to find people who rent homes on Airbnb and other websites and notify them of the tax.
The county's “Host Compliance" short-term rental program launches June 12.
“It's cutting-edge software, allowing us to collect revenues that we are owed," said county planning and environment Commissioner Sarah Lansdale.
Suffolk County Comptroller John Kennedy said he's skeptical it will generate the money Granicus estimates it will.
“I think that it is naive to suspect that all of a sudden another $10 million is just going to flow through the door,” he said.
How it works
The software extracts data from dozens of home-share sites and combines it “with some artificial intelligence, machine learning and also human analysts” to determine how many homes are on the market and where, a Granicus representative said.
“We can leverage that information, get close to what we think is where that property is located and then have humans go through and validate if this is actually the short-term rental,” said Graeme Dempster, Granicus’ product director for North America.
The software can take images from listing photos and identify the properties through data from publicly available websites such as Google maps. It also checks calendars and guest reviews to determine when a home was rented. Those findings are confirmed by employees, and property owners are notified that they need to comply with the law.
“By having that process automated, it alleviates the burden on county staff to go out and uncover where the short-term rentals are located,” Dempster said.
Dempster said it would take the equivalent of about 70 full-time employees to do the work Granicus will perform.
The cost of the software is about $270,000 per year, according to Suffolk officials. Newsday has submitted a Freedom of Information Law request for the contract terms.
Airbnb, which Granicus estimates accounts for 40% of home shares in the county, said in a statement it had “long advocated for a centralized statewide tax collection system to simplify the collection process for jurisdictions across the state and ensure they receive their fair share of revenue.”
Tax nearly doubles
On June 1, Suffolk's hotel-motel tax rose from 3% to 5.5.%.
The tax, levied in addition to Suffolk’s 8.63% sales tax, historically has been used to fund cultural institutions and promote tourism. Revenue generated by the increase will partially support the planning and infrastructure surrounding a proposed Ronkonkoma convention center. It also will fund an increase in county spending for Long Island’s tourism promotion agency, Discover Long Island, from $2 million to $6 million.
Homeowners always have been required to register with the county comptroller’s office to pay the tax, county officials said. Those who refuse to report their earnings face a penalty of up to $1,000 or one year in jail, plus penalties and interest on taxes.
The county collected about $127,000 in penalties and interest in 2022, according to data from the comptroller's office.
Fewer than 10% of county hosts pay their share of taxes, Dempster said. Kennedy said he could not confirm that estimate.
Kennedy said hotel-motel tax revenues fluctuate from year to year, with $10.9 million collected in 2021 and $14.2 million in 2022.
Dempster said his firm has identified about 7,500 Suffolk short-term rentals with an $802 median nightly rate, which could generate $9 to $12 million in additional tax revenue. The properties advertised for rent include luxury homes in the Hamptons.
Kennedy, whose office has tried to enforce payment of the tax since 2016, questioned whether the program would increase enforcement.
He said his staffers have worked for years to bring people into compliance, sometimes by knocking on their doors to inform them of the law.
Vera Chinese covers Suffolk County government and politics. She joined Newsday in 2017 after working as an editor for the East End lifestyle publication northforker and a general assignment reporter for the New York Daily News.
Updated now Newsday travel writer Scott Vogel took the ferry over to Block Island for a weekend of fun.
Updated now Newsday travel writer Scott Vogel took the ferry over to Block Island for a weekend of fun.
