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VACo-supported peer-to-peer vehicle rental bills debut

Two sets of VACo-supported peer-to-peer vehicle rental bills have been introduced in the General Assembly and will be heard by their respective committees soon.  SB 749 (Cosgrove) and HB 891 (Sickles) establish taxation, insurance coverage, sale of insurance, disclosure, safety recall, airport operation, and recordkeeping requirements for peer-to-peer vehicle sharing platforms, while SB 750 (Cosgrove) and HB 892 (Sickles) provide that peer-to-peer vehicle sharing platforms, as defined in the bill, are renters for the purposes of taxation.

Peer-to-peer vehicle rentals involve a vehicle owner listing a vehicle for rent through an electronic marketplace, which sometimes provides insurance, dispute resolution, or other services, but is not involved in the physical exchange of the vehicle.  A prospective renter reviews vehicle selections on the marketplace platform and chooses a vehicle.  The rental platform facilitates the transaction between owner and renter, who then make arrangements for the renter to obtain the vehicle and keys and to return the vehicle after use. In many ways, it operates much like an “Airbnb” system, but for cars.

Currently, peer-to-peer vehicle companies operate in Virginia in an unregulated and untaxed environment.

There are no defined protections for the owner who shares his vehicle or the person who rents the vehicle from the Peer-to-Peer vehicle sharing platform.  In the event of an accident, it is unclear whose insurance company pays.  There is no regulatory control over business transactions occurring at major airports, and airport authorities lack a clearly defined structure to regulate where or when these transactions take place.

Additionally, there is not a defined process for the collection of the Commonwealth’s 10 percent Motor Vehicle Rental Tax (MVRT) or if they do, there is no guarantee that the taxes collected will be remitted to the State to support localities and vital transportation projects.  As confirmed by the Virginia Department of Taxation’s Fiscal Impact report on SB 749, “. . . peer-to-peer shared vehicles and commercially owned rental vehicles are currently subject to the full 10 percent Motor Vehicle Rental Taxes.  However, compliance within the peer-to-peer rental industry is extremely low.”

To address the above concerns, the Department of Motor Vehicles hosted a series of meetings last summer on Peer-to-Peer vehicle sharing.  Subject matter experts worked in workgroups on the insurance, registration, and taxation issues.  While the workgroups made significant progress, there was no agreement on a final consensus-driven legislative fix.

Recognizing these issues, VACo has partnered with a number of other concerned stakeholders, including Enterprise, Hertz, the American Car Rental Association, and several regional/local governmental associations, to support comprehensive legislation that addresses all of the aforementioned issues.  The bills

  • Limit peer-to-peer shared rental vehicles to private passenger vehicles only. This ensures that owners of fleets of vehicles cannot circumvent laws that regulate the rental car industry;
  • Provide clarity with respect to insurance liability and protections to Virginia citizens who share their vehicle through a peer-to-peer vehicle sharing platform;
  • Permit Virginia airports to regulate peer-to-peer vehicle sharing platforms and their use of airport property; and
  • Require peer-to-peer vehicle sharing platforms to comply with Virginia’s tax laws and to register, collect, and remit the same taxes (10 percent motor vehicle rental tax (MVRT) rate) that any other company renting vehicles must remit to the Commonwealth; and
  • Solve a tax collection problem noted by the Department of Taxation and prevent any loss of essential tax revenues that are dedicated to transportation projects and Virginia’s localities.

The peer-to-peer vehicle rental industry has also introduced legislation – SB 735 (Newman) and HB 1539 (Jones).  These bills are problematic for several reason.  First, they seek to incorporate peer-to-peer rentals into the ridesharing chapter of the Code, which incorrectly gives the impression that peer-to-peer renting is not a commercial, taxable venture, which it is.  Second, these bills create a new, much lower tax for peer-to-peer rentals – instead of the 10 percent MVRT, it proposes a 4 percent rate, which affords just 2 percent to locals instead of the 4 percent from the MVRT.

Currently, both SB 749 and SB 735 are scheduled to be heard in the Senate Commerce and Labor Committee on Monday, January 27.

VACo members are encouraged to contact their Senators on the Senate Commerce and Labor Committee to support SB 749 (Cosgrove) but to oppose SB 735 (Newman).

VACo Contacts: Chris McDonald, Esq.; Katie Boyle; and Jeremy Bennett

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