MARSHALL — The city of Marshall is looking at making a change to how it collects local lodging sales taxes. Having the state of Minnesota collect the taxes could help improve transparency for short-term rentals like Airbnb or Vrbo rentals, city staff said.

“The state has more ability and better enforcement mechanisms for collecting on the short-term rental, along with the other lodging taxes, and passing that on to the city,” said Marshall City Attorney Pam Whitmore.

At Tuesday’s Marshall City Council meeting, council members voted to introduce proposed updates to city ordinances, which would move administration of Marshall’s lodging tax to the Minnesota Department of Revenue.

The city of Marshall has collected a local tax from lodging establishments like hotels, going back to at least 1976, according to agenda materials at Tuesday’s council meeting. The majority of that 3% tax is used to fund Marshall’s Convention and Visitors Bureau. In 2012, Marshall voters passed an additional 1.5% lodging tax to help pay for the Minnesota Emergency Response and Industrial Training (MERIT) Center and the Southwest Minnesota Regional Amateur Sports Complex.

Mayor Bob Byrnes said currently, the city clerk’s office does the paperwork and collection for lodging taxes. “And then the lodging establishment has to go through some paperwork to submit the amount, and that doesn’t always happen consistently every month,” Byrnes said. Byrnes said having the DOR administer the tax would be better for consistency and transparency.

Hosting sites like Airbnb currently only list taxes administered by the state of Minnesota, and not individual cities, according to agenda materials at Tuesday’s meeting. Having the state administer the lodging tax for short-term rentals would be more transparent, and a simpler process, city staff said.

“Airbnb and Vrbo, they would collect it directly on their websites, and they would remit that to the state of Minnesota. And then the state of Minnesota quarterly, along with the sales and use tax that was previously collected from them, would be sent in one lump sum,” said Marshall City Clerk Steven Anderson.

Anderson said short-term rentals appeared to be a growing type of property use within the city.

Currently, he said, there are 15 short-term rental properties in Marshall. “Just a couple years ago, there was maybe one or two,” he said. “Hopefully, transferring this to the state will show some better transparency on our end, and also for the short-term rentals.”

Agenda materials at the meeting said the Minnesota Department of Revenue would charge an administrative fee of 1% of the amount collected in lodging tax. That would range from $100 to $300 per month.

The state would require a 90-day written notification before it could administer the lodging tax.

Council members voted to introduce the proposed ordinance update, that would delegate lodging tax administration to the Minnesota Department of Revenue.