Hochatown Sues Airbnb Over Misdirected Tax Revenue From Vacation Rentals

Hochatown Sues Airbnb Over Misdirected Tax Revenue From Vacation Rentals

The town of Hochatown has filed a lawsuit against Airbnb, the Oklahoma Tax Commission and the City of Broken Bow, claiming vacation rental tax revenue meant for Hochatown has been incorrectly sent elsewhere because of outdated mapping and ZIP code data.

The lawsuit could determine how millions of dollars in lodging and sales tax are distributed in one of Oklahoma's busiest tourism destinations. Town leaders say the missing revenue is critical for improving roads, expanding public safety and building the infrastructure needed to support Hochatown's rapid growth.

Hochatown Airbnb Lawsuit Centers On Tax Collection Errors

Filed in McCurtain County District Court, the lawsuit alleges Airbnb's tax collection system incorrectly assigns some vacation rentals inside Hochatown's town limits to neighboring Broken Bow.

According to the filing, the problem stems from outdated geographic mapping and ZIP code information that automatically identifies properties by their mailing address instead of their actual municipal boundaries.

Hochatown says it identified numerous incorrectly classified cabins and notified Airbnb of the problem. While the company reportedly acknowledged issues with its address system, the town claims a broader correction was never implemented.

The Oklahoma Tax Commission, which administers state tax collections, is also named in the lawsuit because it distributes the tax revenue collected from short-term rental platforms.

Missing Revenue Could Affect Hochatown's Growth

Although the exact amount remains unknown, Hochatown believes a substantial amount of tax revenue has been diverted over the past several years.

Tourism generates more than $22 million annually for the community, making lodging and sales taxes one of the town's most important revenue sources.

Hochatown incorporated in late 2022 to establish its own municipal government and retain local tax dollars instead of relying on Broken Bow. Town officials say those funds are needed to pave roads, expand utilities and develop permanent police and fire departments to serve the growing tourism destination.

One of the biggest challenges remains the community's lack of its own ZIP code. Because Hochatown shares a mailing system with Broken Bow, automated software used by booking platforms can incorrectly assign tax collections based solely on postal addresses rather than city boundaries.

Court Could Decide Where Future Tax Dollars Go

The lawsuit also names Broken Bow as a defendant, but the filing makes clear the city is not accused of intentionally receiving money that belonged to Hochatown.

Instead, Hochatown argues Broken Bow must be included because it currently holds tax revenue that may ultimately belong to the town. The lawsuit also states that neither Airbnb nor the Oklahoma Tax Commission provides enough transaction-level data for Hochatown to independently determine exactly which properties were misclassified.

Hochatown is asking the court to order all disputed tax collections into an escrow account until municipal boundaries can be verified and a judge determines which tax revenue belongs to each community.

A ruling could not only determine how much money Hochatown may recover, but also establish how online vacation rental platforms handle tax collection in Oklahoma communities where ZIP codes and municipal boundaries don't always match.

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