Oklahoma resort town sues Airbnb, says its cabin tax revenue was sent to Broken Bow

A tax dispute is unfolding in one of Oklahoma's best-known cabin destinations. Hochatown is suing Airbnb, alleging the short-term rental company sent lodging tax revenue from local vacation homes to neighboring Broken Bow instead.

What happened?

On July 15, Hochatown sued in McCurtain County District Court, saying certain rentals inside town limits were assigned incorrectly in Airbnb's system. As The Oklahoman reported, Airbnb advertises more than 1,000 homes in the area, including luxury cabins that can cost thousands of dollars for a five-night stay.

In the lawsuit, Hochatown says it has found multiple cases in which lodging taxes from rentals within the town were collected by Airbnb and at least partly paid to Broken Bow. Officials say the exact amount has not yet been determined, but they believe the total in dispute could be substantial.

The money at issue is important to the town's budget. As The Oklahoman reported, Hochatown's latest budget projects $4.35 million in lodging tax collections next year, slightly more than expected sales tax revenue. 

Broken Bow is also named in the case, though Hochatown says it is not accusing the city of wrongdoing and included it because it may have received money tied to the disputed properties.

Why does it matter?

With fewer than 300 official residents, Hochatown still expects lodging taxes to bring in $4.35 million next year, a little more than sales taxes. Revenue from the area's large short-term rental market helps pay for roads, emergency response, and other local services.

Hochatown has spent years trying to establish itself as separate from Broken Bow, including a fight to secure its own ZIP code. The lawsuit says some local cabins were assigned to the wrong city.

What's being done?

For now, Hochatown wants the court to place the disputed lodging tax money in an escrow account until it decides which municipality should receive it, The Oklahoman reported. That would prevent more funds from going to the wrong place while the case moves forward.

The town says it raised the issue with Airbnb and asked for a fix, but the lawsuit alleges the tax collections continued to be misallocated. In one filing, the lawsuit states, "As a result, Broken Bow as the recipient of such funds, must be included in this case as an interested party."

The lawsuit also states the disputed total "is presently unknown but is believed to be substantial" after some properties were "improperly coded, mapped, categorized, or otherwise assigned to Broken Bow."

An Airbnb spokesman told The Oklahoman, "We can't comment on active litigation. Airbnb is committed to fair and accurate tax collection." The company added that it handled over $22 million in Oklahoma tourism taxes last year and more than $93 million statewide since 2017.

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