A years-long battle over whether Internet travel companies should collect tourism taxes played out in a Tallahassee courtroom on Tuesday. Seventeen Florida counties are appealing a lower court’s ruling that the online companies don’t have to collect taxes on the hotel rooms they help book.
It’s the same tourism-tax issue being fought in state and federal courts across the country. And on Tuesday, online travel companies had a chance in a Florida’s First District Court of Appeals to argue what a lower court already found. They say, when people rent a hotel room, no matter if they use an intermediary booking website, they should only have to pay tax on the room price itself, not on the commission paid to the website.
Darrell Hieber, representing five online travel companies, including Expedia.com, said, “Well, the only one who can provide occupancy is the one with the room.”
He said, county and state tax codes clearly say, it’s up to the person who owns the property to collect the tax.
But the counties are saying, the companies are getting away with a scam by claiming they don’t rent rooms. Bob Martinez, who’s representing 17counties, including Leon, Wakulla and St. Johns, said, the companies are using semantics to avoid collecting taxes.
“If the public knew that you could not rent a room by calling Expedia, Orbitz, Travelocity or Priceline, they’d be out of business,” he said. “But in these courtrooms, what they come in and tell you is, ‘No we don’t ‘rent a room.’”
Martinez said, the tax should be charged on the total price the customer pays, including the websites’ commissions.
Justice Philip Padovano seemed to agree, at least momentarily. He read a part of the local tax ordinance and said it seemed the counties intended the tax to apply to the whole transaction, not just the hotel room price.
“They’re trying to make the taxable event the thing that happened,” he said. “That is the tourist renting this room, and they’re trying to say that the tax would be on the total consideration.”
But Hieber, arguing for the online travel companies, said, the state Legislature would have to redefine who a room dealer is in order for counties to collect taxes. It’s a question that has been hotly debated for the past decade with no resolution.
“That may or may not be sound policy to tax intermediaries who do not own a room and can’t rent it out, but that is not what this statute clearly says,” Hieber said.
The district court has not yet said when it will release its opinion.