A local Florida tourist development tax applies only to the amount of money that online travel companies (OTCs) send to hotels for reserved rooms and not to the additional compensation retained by the OTCs. A number of Florida counties alleged that the tax applies to the entire amount the OTCs collect from customers who reserve their hotel rooms through the OTCs, including the amount collected by the OTCs from consumers who use their websites but not remitted to the hotels. Although tourists are obligated to pay the tax when it is charged, the appellate court determined that it is the hotels that are exercising the taxable privilege of renting rooms to consumers. The privilege being exercised for purposes of the tax is the rental of rooms to tourists. The tax is imposed on the consideration paid for the occupancy of the room, excluding any taxes or other fees. The consideration is the amount received by the hotels for the use of their rooms and not the mark-up profit retained by the OTCs for facilitating the room reservation. The court held that the OTCs are conduits through which consumers can compare hotels and rates and book reservations but they do not grant possessory or use rights in hotel properties owned or operated by third-party hoteliers. The consideration the OTCs retain is not for the rental or lease of the room but is instead for their service in facilitating the reservation. According to the court, the statute does not plainly indicate an intention to include the additional fees charged by OTCs for advertising hotel facilities, setting up Internet websites, and forwarding and assisting hotel customers to make reservations. It is only the rent itself, the amount charged by the hotels for allowing customers to occupy their rooms, that is taxed.
Source: CCH Group
