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Suffolk County using AI to collect short-term rental taxes

Contracted firm predicts $9M to $12M in additional revenue

From left: Suffolk County executive Steve Bellone and Granicus CEO Mark Hynes (Photo Illustration by Steven Dilakian for The Real Deal with Getty and Granicus)

From left: Suffolk County executive Steve Bellone and Granicus CEO Mark Hynes (Photo Illustration by Steven Dilakian for The Real Deal with Getty and Granicus)

Artificial intelligence is coming for Suffolk County short-term rental owners avoiding the local hotel-motel tax.

To collect more taxes from hosts on platforms such as Airbnb, the Long Island county will implement an AI software program beginning next week, Newsday reported.

Government software provider Granicus is administering the program, mixing AI technology with human analysis to identify homeowners who rent out their properties and inform them of the 5.5 percent tax, which rose from 3 percent this month.

The software takes data from home-sharing sites, using AI, machine learning and human analysts to determine the number and location of rental properties. The software confirms rental activity by cross-referencing listing photos with publicly available data and checking calendars and guest reviews.

Graeme Dempster, Granicus’ product director for North America, estimated it could bring in an additional $9 million to $12 million in tax revenue. County Comptroller John Kennedy is more skeptical. The county collected $10.9 million from the tax in 2021 and $14.2 million in 2022.

Aside from increasing revenue, the AI software is expected to streamline the enforcement process by reducing the burden on county staff. The software costs approximately $270,000 per year, according to county officials. 

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The new tax revenue would support the proposed Ronkonkoma convention center and boost spending on tourism promotion in Long Island. (The peninsula’s other county, Nassau, recently announced a new marketing campaign.)

While Suffolk County has always required homeowners to register and pay the tax, compliance has been low. Dempster estimated that fewer than 10 percent of hosts are fulfilling their tax obligations. Homeowners who fail to report short-term rental earnings may be hit with penalties of up to $1,000 or one year of imprisonment, but it is not clear that any have.

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Granicus has already identified 7,500 short-term rentals in the county, including on the East End.

Airbnb, the dominant short-term rental platform, expressed support for the program, saying in a statement that it has “advocated for a centralized statewide tax collection system to simplify the collection process for jurisdictions across the state and ensure they receive their fair share of revenue.”

— Holden Walter-Warner

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AIAirbnbLong IslandShort Term RentalsSuffolk County