VRBO tax errors for 2025 (tax on platform fee aka Guest Service Fee)

[Christina B.]

I've been living a separate tax nightmare (another post for another time) but curious if anyone else is seeing that starting 2025, VRBO began taxing not just nightly rate total + host fees (e.g. cleaning, pet, extra guests), but their own Guest Service Fee? It's possible mine is an isolated issue and VRBO is supposedly escalating this with their Billing Department. This is on top of their amended 1099s for 2024 (amended is correct now). I did start checking 2024 to get a baseline for when this became an issue but looks like they were calculating it correctly (the taxes were applied after each item- e.g. after the nightly rate, then after the cleaning fee, etc.).

Is anyone else seeing this? (For me, it's not just one booking, it's all my 2025 VRBO bookings.)

Correct formula (I think): nightly rate total of $2500 + cleaning fee of $400 = $2900 x .102 (10.2% total taxes for my area in Colorado)

VRBO 2025 formula: nightly rate total of $2500 + cleaning fee of $400 + Guest Service Fee of $400 = $3300 x .102

FWIW, Airbnb is still using the first formula.

[Christina B.]

For clarification and thank you @Michael Baum, @John Underwood, and @Patricia Andriolo-Bull for your replies, this only regards 2025 bookings. (Side note: the original 1099 VRBO sent me for the 2024 tax year was incorrect and missing some December bookings but they sent me an amended 1099 which is correct.)

This is why it's puzzling to me that their system was calculating and remitting the taxes in 2024 correctly but in 2025 is clearly adding in the guest service fee (platform fee) as part of the total which is taxed. I realize in other countries, VAT may apply to that platform fee. But it hasn't so far in the US, to my knowledge. Taxes should just be on nightly rate total + host fees (cleaning, etc.). Does anyone in any state in the US pay taxes on the platform fee?