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Charleston County Reaches $9.6 Million Settlement with Airbnb

Community development in Charleston County

News Summary

Charleston County has accepted a $9.6 million settlement from Airbnb, part of a larger lawsuit regarding unpaid accommodations taxes and business license fees affecting multiple municipalities in South Carolina. The lawsuit, initiated in 2021, alleges rental platforms failed to remit collected taxes. The County Council is now exploring options for allocating these funds to community projects, enhancing infrastructure, drainage, and affordable housing initiatives.

Charleston County has accepted a settlement of $9.6 million from Airbnb as part of a larger lawsuit concerning unpaid accommodations taxes and business license fees. This settlement was reached as part of a multi-city lawsuit that has involved several South Carolina municipalities, including Charleston, North Charleston, Columbia, Myrtle Beach, Folly Beach, Isle of Palms, and North Myrtle Beach. The legal action was initiated in 2021 and focuses on the allegations that Airbnb, as well as other rental platforms like VRBO and TripAdvisor, failed to collect and remit local taxes despite collecting them from rental operators and vacationers.

The lawsuit established a total settlement pool of $60 million for affected municipalities, with Charleston County settling for the aforementioned $9.6 million in February 2023. Though Charleston has reached a settlement, ongoing litigation continues against other rental companies involved in the case.

In a County Council meeting held on April 29, council members voted unanimously to explore how best to allocate the settlement funds. The council has directed staff to compile a list prioritizing potential projects or areas of need within the community. By moving the funds from the accommodations tax into council contingency funds, the council aims to increase flexibility in how the money can be spent.

Council Chairman Kylon Middleton has indicated that the funds could be used for various community projects, including infrastructure improvements, drainage enhancements, and affordable housing initiatives. The Accommodations Tax levied in Charleston County is currently set at 2%, which helps create a loan fund aimed at supporting affordable housing. For the upcoming year, the county anticipates generating nearly $12 million from this tax.

Other localities within the Lowcountry region, such as Mount Pleasant and Isle of Palms, have also reached settlements linked to the same lawsuit. Mount Pleasant received $4.42 million, while Isle of Palms settled for $1.1 million, contributing to the total statewide effort to address the issue of unpaid taxes by short-term rental companies.

The matter of short-term rentals and the regulations governing them has led to disputes in various communities across South Carolina. In response to these issues, local jurisdictions like Charleston and Folly Beach have imposed caps on rental licenses in an effort to manage the impact of such rentals on neighborhoods and local economies.

Complaints raised in the lawsuit highlighted that rental companies were allegedly collecting accommodations taxes from guests yet failing to remit those funds to local municipalities. This situation have raised concerns about the financial ramifications for city services that rely on these taxes to operate effectively.

As discussions continue among Charleston County officials regarding the ultimate use of the settlement funds, no definitive decisions have yet been made on specific projects or allocations. The upcoming months will likely clarify how the county plans to leverage this unexpected influx of funds to address pressing community needs and improve infrastructure, housing, and other critical areas.

In summary, Charleston County’s acceptance of the $9.6 million settlement from Airbnb is a significant step in a broader legal battle focused on ensuring compliance with local tax laws. The allocation of these funds remains a priority for the County Council as they seek to maximize the benefits for the community.