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Kansas City Auditor’s Office release audit assessing taxes, fees on short-term rentals

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Posted at 11:40 AM, Nov 29, 2022
and last updated 2022-11-29 12:40:53-05

KANSAS CITY, Mo. — The Kansas City Auditor’s Office released an audit Tuesday that focused on the impact short-term rental activity has on the city’s convention and tourism taxes and fees.

The definition of a hotel in Missouri state statute does not prevent the collection of the Hotel, Motel Occupancy Fee from short-term rentals in Kansas City.

However, the section of the city code for the occupancy fee uses the same definition as the Convention and Tourism Tax (C&T tax), which excludes short-term rentals from paying that fee.

The audit states the city would have collected an estimated $2.28 million in C&T taxes between July 2021 and August 2022, had the city been able to assess and collect this tax from short-term rentals in Kansas City. The auditor's office also estimated the city would have collected about $354,000 in hotel, motel occupancy fees over the same period.

The audit notes the city’s ability to assess and collect the C&T tax on short-term rentals is dependent upon the state legislature changing state law to be consistent with other Missouri cities collecting similar convention and tourism taxes. In contrast, the Kansas City, Missouri, City Council, with voter approval, could establish an occupancy fee for short-term rentals.

The audit recommends the mayor and City Council continue their legislative priority to change the state statute that limits Kansas City’s ability to tax short-term rentals like other businesses in the accommodation industry. The audit also suggests that they take steps to assess a Hotel, Motel Occupancy type fee on short-term rentals.

You can view the full report here.

A companion report evaluating compliance with short-term rental permit requirements will be released in the coming weeks.