In southeast Oklahoma, Hochatown has become a magnet for tourists, many of whom use Airbnb to find and pay for vacation rentals. But in a new lawsuit, Hochatown says the company has stiffed the town on lodging taxes.
Hochatown is home to around 240 people and 3300 active Airbnb listings. The community incorporated as a municipality in 2022 after the COVID-19 pandemic brought a massive explosion in short-term rental traffic — and all the revenue and infrastructure demands that come with it.
When a traveler books a rental, they pay municipal lodging taxes on their purchase. Airbnb collects those taxes and works through Oklahoma Tax Commission systems to send the money to the appropriate municipality.
Hochatown estimates it collected about $4.3 million in lodging taxes last year — nearly half the town's total revenues.
But the town claims it isn't receiving all the taxes it's owed from Airbnb transactions. In a lawsuit filed in McCurtain County District Court earlier this month, the town's attorneys wrote that lodging tax for properties within Hochatown's municipal boundaries went to nearby Broken Bow instead.
Hochatown is suing Airbnb, Broken Bow and the Oklahoma Tax Commission over the lost revenue. The suit says the amount of money Hochatown has missed out on is "unknown but is believed to be substantial."
Part of the issue, according to the lawsuit, is that Airbnb relies on ZIP codes to determine where municipal taxes are paid.
Hochatown had its own post office that operated from 1894 to the 1960s, when the original townsite was flooded to create Broken Bow Lake. A single post office generally serves a single post code. But today, Hochatown has neither.
In November, U.S. Sen. James Lankford, R-Oklahoma, introduced a measure to create a new ZIP code for Hochatown. Former Sen. Markwayne Mullin co-sponsored that bill and another measure that would create ZIP codes for 69 communities across the country, including Hochatown. Both bills have stalled without ever seeing a vote.
According to reporting from NOTUS, U.S. Postmaster General David Steiner has said creating those new ZIP codes would cost the U.S. Postal Service around $800 million in initial costs.
The suit asks the court to order Airbnb and the Oklahoma Tax Commission to resolve the improper tax allocation. In the meantime, Hochatown asks for all property taxes Airbnb collects from properties assigned to Broken Bow be placed in a holding account.
This report was produced by the Oklahoma Public Media Exchange, a collaboration of public media organizations. Help support collaborative journalism by donating at the link at the top of this webpage.
