Airbnb Settles $120 Million Tax Refund Lawsuit Against San Francisco for $0
Airbnb has agreed to settle a lawsuit against the City and County of San Francisco that sought roughly $120 million in tax refunds, ending a two-year dispute over how the short-term rental platform was taxed in its home city. Under the proposed agreement, neither side will pay the other.
The lawsuit, filed Feb. 23, 2024, in San Francisco Superior Court, challenged the city’s calculation of several business taxes paid by Airbnb between 2019 and 2022. The company argued that San Francisco incorrectly classified its business activity under the city’s tax code, which allegedly caused the company to overpay tens of millions of dollars in taxes during those years.
The agreement also addresses tax obligations for more recent years, confirming that neither side owes additional amounts for certain city business taxes for the 2023 and 2024 tax years.
Airbnb said the city treated it as a travel arrangement and reservation services business rather than an online platform that connects hosts and guests. The company argued that this classification led to an incorrect calculation of its tax obligations.
San Francisco officials defended the city’s tax structure and said the agreement protects public funds while ending the litigation. City Attorney David Chiu said the settlement allows the city to uphold its tax laws and move forward without returning the disputed funds.
The refund claim was unusually large for a local tax dispute. The disputed funds were held in the city’s litigation reserve while the case was pending, a fund used by the city to hold money while lawsuits are pending.
Businesses sometimes file refund lawsuits when they believe a government agency incorrectly applied a tax statute or misinterpreted how a company’s activities should be categorized. In those situations, the company typically pays the taxes first and later seeks reimbursement through litigation if it believes the assessment was improper.
Courts reviewing these disputes look at how the tax code is written and whether the government applied it correctly. These cases often focus on how revenue is defined and how a company’s business model fits within the tax code.
San Francisco’s gross receipts tax, which was part of the dispute, is a business tax based on a company’s total revenue rather than its profits. The amount owed can vary depending on how a business is categorized under the city’s tax code.
Airbnb’s lawsuit sought refunds related to gross receipts taxes, payroll expense taxes, homelessness gross receipts taxes, and related penalties and interest for the 2019 through 2022 tax years.
Disputes involving technology platforms have increased as cities apply existing tax systems to newer digital businesses. Many local tax laws were written before the rise of online marketplaces, requiring cities to apply existing statutes to companies that operate primarily through digital platforms.
The lawsuit also drew criticism from labor unions and several city officials. Labor groups organized protests and called for a boycott of Airbnb in 2025, saying the company should pay what they described as its fair share of taxes.
The settlement requires approval from the San Francisco Board of Supervisors.
