Airbnb pays back taxes to San Francisco

Airbnb has paid back taxes that ran into the millions of dollars to the city of San Francisco, the company said Wednesday.

The San Francisco-based company said in a statement on Wednesday that it has paid in full a back-tax bill. A spokesman wouldn't say how much the company paid

San Francisco’s City Treasurer Jose Cisneros ruled in 2012 that Airbnb owed back taxes. He has declined to reveal how much money he collected so far from Airbnb, saying local law mandates confidentiality on all tax matters.

Officials had estimated that Airbnb owed the city as much as $25 million, local media has reported since Cisneros' ruling.

Airbnb has become one of Silicon Valley's most successful start-ups, valued it at $13 billion, according to the Wall Street Journal.

But the company has come under pressure from many cities it operates, including New York City, and the San Francisco "settlement could set a precedent for Airbnb, which is facing pressure from other cities to pay their hotel taxes," the San Francisco Chronicle reported. "It’s been estimated that the total the firm owes nationwide could amount to $200 million."

The back-tax issue had threatened to unravel legislation that the supervisors passed last year legalizing short-term home rentals in the city. The law mandated that Airbnb pay the city's hotel tax going forward, but it didn't address issue of back taxes.

Senator Dianne Feinstein, a Democrat, had opposed the legislation, saying “Simply put, this bill will further increase already sky-high rental costs.” Critics said the short-term rental services like Airbnb kept housing units off the rental market in a city with an affordable housing shortage. 

The law, which took effect Feb. 1, allows only permanent residents to offer short-term rentals; it requires hosts register with the city and get a business license and permit; and it mandates the collection of hotel tax. It also limits entire-home rentals to 90 days per year, requires each listing to carry $500,000 in liability insurance, and establishes guidelines for enforcement by the Planning Department.

Al Jazeera with The Associated Press