HomeAway, which is now part of Expedia, is fighting a $18.7 million tax bill from the Michigan Department of Treasury. The state says the company failed to pay taxes and interest from 2020 through 2022. HomeAway is arguing that the hosts, not the platform, were responsible for paying the state taxes, and the dispute is now moving through the Michigan Court of Claims.
The Core Disagreement
Michigan completed an audit and decided that HomeAway should have sent taxes directly to the state for bookings where hosts chose to have taxes added during checkout. The state says HomeAway collected those taxes, so the company should have paid them.
HomeAway says that’s not correct. The company says it never kept any tax money and always passed the funds to the hosts who were responsible for paying the state.
How HomeAway’s System Worked
When hosts joined HomeAway, they had to pick one of two ways to handle taxes:
- Have taxes added during booking.
Guests saw the tax as part of the total price. HomeAway collected the tax, then sent it back to the host. The host was responsible for paying the tax to Michigan. - Handle taxes themselves.
Hosts collected and paid taxes independently, without using HomeAway’s checkout system, and handled all payments to the state.
Michigan’s View
Michigan argues that the act of collecting tax during the booking process made HomeAway the party responsible for sending that money to the state. By not paying those funds directly, the Treasury claims, HomeAway failed to pay taxes that should have been delivered on behalf of hosts.
HomeAway’s Position
According to the lawsuit, HomeAway says both options made the host responsible for paying Michigan’s use tax. The company says it only acted as a pass-through when taxes were collected online, and that hosts explicitly acknowledged their duty to pay taxes to Michigan.
What Happens Next
Both sides declined to comment while litigation is active. The case will move forward in the Michigan Court of Claims, where a judge will determine who was legally responsible for the disputed tax payments.
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