do travel agents charge sales tax

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15 Tax Tips for Travel Agents

Taxes , Vacation

The thought of having to prepare and file your taxes for your independent travel agency may send you a panic. Just take a breath and calm down because we’ve got 15 tax tips for travel agents to make tax time less stressful.

Before we dive into our helpful tax tips for travel agents, we need to stress something extremely important:

Whatever you do, don’t ignore your taxes. You don’t want to receive a phone call or letter from the IRS. Being audited is something you definitely don’t want.

Filing taxes for your independent, home-based travel agency doesn’t have to be a daunting task. Our top tax tips for travel agents are not only easy to understand, but they may even save you money and give you a bigger tax break.

Without further ado, here’s our list of top tips for travel agents:

Get and Stay Organized

If you find yourself sifting through papers or tearing through boxes to find information, you need to get organized. Create computer file folders to organize all of your information by client, resort, cruise line, and any other destination and back up those files with physical file folders, because it’s always good to have backups.

Use software such as QuickBooks or Excel to keep a running total of expenses. With the click of the button, you can print out reports and use them to prepare and file your taxes.

Backup Your Files

Tax tip for travel agents #2 piggybacks the first tip. Whether you use cloud-based software like TravelWorks or keep files on your computer, make sure your valuable files are protected.

You may want to invest in data backup services to ensure your data is secure. Two popular options include:

Carbonite : Costs starting at $59.99 with unlimited storage space
IDrive : Free and paid versions are available with 1TB of storage space.
Look for Often-Overlooked Deductions

Perhaps the most money-making tax tip for travel agents is this: take everything you’re allowed to take! You may not be aware of how many deductions are available to you. Here are just a few of the most overlooked deductions:

Car Insurance: If you have a brick and mortar travel agency with a commercial vehicle, you may be able to deduct the insurance. It’s best to ask a certified public accountant about this.
IRA/401K Contributions: If you haven’t maxed out your IRA or 401(k) contributions, consider adding a little more before April 15th. If you are 59.5 years old or older, you can deposit money into your IRA before April 15 th , claim the deduction, and withdraw at a later date without penalty.
Health Insurance Premiums
Advertising and Marketing
Meals and Entertainment
Educational Expenses (Conferences, Conventions, & Seminars)

This is just a short-list of often-ignored deductions. Check with a CPA to see what write-offs you may be missing. And don’t forget: keep your receipts !

Consider the Home Office Deduction

Because independent travel agencies are often home-based, an excellent tax tip for travel agents is to take the home office deduction. You are allowed to deduct $5 per square foot of office space, up to $1500. Keep in mind, this deduction requires you use your home office exclusively for work, not for arts and crafts, guests, or as a home gym.

Capital Expenditures Apply to Your Business

The term “capital expenditures” is also known as the less-formal, “equipment and supplies” and includes items that don’t need replacing each year, including:

Office Furniture
Software Programs
New Equipment

Office supplies can also be written off, so definitely keep your receipts from purchasing pens, paper, ink, toner, notepads, and anything else you use in your business.

Don’t overlook this tax tip for travel agents, because up to $500,000 can be written off in this category!

Hire a Certified Public Accountant (CPA)

As one of the most critical tax tips for travel agents, hiring a CPA (certified public accountant) is one of the smartest things you can do as an independent travel agent. He or she could save you money and get you an even bigger tax break than expected.

Remember, a CPA is the expert required to stay up to date with the latest in accounting and taxes. You probably don’t understand IRS codes like CPA’s do, so it’s best to leave the filing of your taxes to someone who does.

Get in to see your accountant ASAP so you can determine whether or not you owe or are getting a refund. If you owe, you’re more than welcome to wait until the very last minute to file with the IRS, but if you are getting a refund, you want that cash in your pocket as soon as possible. Filing early also helps protect you from fraud, which is a tax tip for travel agents detailed below.

Safeguard your data

Scammers love to take advantage of unsuspecting people innocently filing their taxes by stealing

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Social Security numbers and filing your refund before you get around to it.

When filing your taxes, t’s vital always to use a secure server when sending information to your accountant. Also, verify that your accountant is taking the necessary precautions and is backing up and storing your information securely.

Deduct Your Car

In #3 of our tax tips for travel agents listed above, we mentioned car insurance as an often overlooked deduction. But you are also allowed to deduct your car as a business expense if you use it for business.

There are two possible expense options, so choose whichever comes out as a higher deduction:

Standard Expenses: Multiply total miles driven for business x standard mileage rate of 53.5¢/mile + 14¢/mile for miles driven doing charitable work
Actual Expenses: If you kept detailed records of all of your business driving, you could deduct any actual costs for gas, repairs, etc, based on the percentage of time you drove the care for business purposes
Know the Difference Between an Independent Contractor and an Employee This is an important tax tip for travel agents to understand. The difference between an independent contractor and an employee can sometimes be a little blurry, so here’s a basic breakdown:
Independent Contractor: An independent business person. They run their own business, but do work for other businesses.
Employee: Hired by you to perform specific duties under your direction.

Send any independent contractors working for you a 1099 tax form as soon as possible and make sure they complete a W9 form for you as well.

Deduct Your Own Travel Too

Most independent travel agents reveal their passion for travel through their adventures around the globe. One huge benefit of being an independent travel agent, among many others, is that you can deduct your own travel as a business expense, including:

Transportation
Costs of Visiting Attractions
Research and Investigation of Destinations

Of course, any trips you deduct must be related to any aspect of your business. But as a travel agent, that’s easy to do since any place you visit could be considered a future destination for your clients.

Keep Your Receipts

This is one of those tax tips for travel agents that should go without saying, and we’ve said it a few times already in this article, but make sure you keep your

As a small business owner, one of the biggest mistakes you can make is assuming your credit card statement is good enough for the IRS. WRONG. If you get audited, and we hope you don’t, you need to show itemized receipts for everything you bought. To be even safer, it’s an excellent idea to scan all receipts as well.

Note Any New Tax Laws

Tax deductions and allowances change from year to year. For example, in 2018, a new tax deduction came available to small businesses and could apply to your travel agency business. For example, if you earned $20,000 selling travel in 2018, you can deduct 20% of that. There are limitations to this particular deduction, and it’s best to ask your CPA about it.

Keep Business and Personal Separate

As an independent travel agent, it’s easy to mix up personal expense receipts with business expense receipts. The simplest way to alleviate this problem is by using a business credit card for all your expenses, not a personal credit card. And, if we haven’t mentioned it earlier, don’t forget to keep your receipts.

Know when to call for help.

This is an important tax tip for travel agents because you are a go-getter entrepreneur who likes to take charge. But filing your small business taxes takes a lot of time and attention to detail, so it’s best to leave it to your CPA.

However, if you want to do it yourself, there are courses out there that can help. Or you could always just call an accountant and ask for a little clarification. Don’t be afraid to ask for help, it’s critical to file your taxes correctly.

Save More Money and Use Our Tax Tips for Travel Agents

Not only can you save money with the tax tips for travel agents listed above, but you’ll also save yourself time, headaches and frustration. If preparing your taxes makes you uncomfortable, contact a certified public accountant or tax professional. It’s better to pay someone who understands the tax laws than it is to file your taxes on your own and risk making costly mistakes.

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Are travel services taxable?

By Robert Dumas on Thu, Jun 16, 2022 @ 02:17 PM

Topics: sales tax compliance taxability economic nexus

Summer vacation season is here – and it’s yet another area where sales tax shows up.

The sales tax associated with s ervices is a different sales tax animal as compared to tangible personal property. T he taxing of certain travel-related services, such as lodging, can be taxable in some states. The likes of Expedia and Orbitz have a long history of battling various states in the courts even as localities start making deals with new players in hospitality.

Here’s a brief overview of travel tax.

The debate goes way back

A decade ago the Tax Foundation was addressing how local officials in 25 states and the District of Columbia sought to reinterpret hotel occupancy tax ordinances to apply to amounts paid by consumers to online travel booking services (OTCs), “with limited success.”

At that time, OTCs had won cases in 18 states, the companies’ booking of hotels and other travel details often putting them outside what the Foundation called “the proper scope of hotel occupancy taxes.” The taxation question was further tipped in OTCs’ favor by relatively few states levying sales tax on services (which now may be steadily changing).

Nevertheless, the Foundation concluded in its 2012 article, “local governments should not expect easy revenue from pursuing such claims.”

Three years later, a District of Columbia Court of Appeals ruled that OTCs Expedia, Priceline, and Orbitz had to pay the District more than $60 million in unpaid sales tax dating back to 1998. The court upheld a previous ruling that the online travel agencies were “vendors” subject to sales tax on the retail rates they charged consumers, including the online travel agencies’ service fees, and not just for the sales tax on the net rate that they collected from consumers and handed over to hotels.

Working with jurisdictions

Not all jurisdictions were as lucky as D.C. Shortly after that decision, courts blocked states’ moves to require OTCs to collect tax, notably lodging taxes in California .

More recently, tax jurisdictions big and small seem to have become aware of the money they’re missing, especially when it came to accommodations. To cite Expedia as one example, some 16 states require the OTC to collect some kind of sales tax.

Three years ago it was determined that booking agents (including OTCs) were required to collect Pennsylvania 6% state and local hotel occupancy taxes on the full retail rate charged for a hotel room. The applicable taxes must be charged on accommodation fees and any other amount charged by the booking agent , not the hotel.

Yet just recently the Louisiana Court of Appeals determined that OTCs do not owe local sales tax on the fees they charge to their customers but the hotels in question do.

Traveling overseas? And as nexus and sales tax requirements loom in the U.K., British opponents proclaim that taxing online sales of OTCs will produce nothing short of a “significant impact” on travel businesses.

Some in the travel industry find it easier to just work with the tax man. Back in the U.S., Airbnb – often touted as a leader among online travel services working proactively with tax jurisdictions – spells out occupancy and other taxes by state on its site.

(A host of federal taxes, incidentally, are usually baked right into the cost of an airline or other travel ticket).

In short, in this always-changing field, don’t be surprised to encounter sales tax in many spots during your vacation travels. Seems you can’t leave home without it.

TaxConnex can help your business stay on top of your taxability and ensure you are maintaining compliance in the states where you have an obligation.  Get in touch  to learn how we can help you!

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2006 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.

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Understanding tax obligations for online travel agencies

If you’re old enough to have secured lodging without the help of the internet, you understand how online travel agencies have revolutionized the hospitality industry. Online travel agencies give consumers greater choice and more control over bookings, and they help businesses connect with customers to fill vacancies. But for the online travel agencies themselves, this service comes at a cost: a virtual world of tax obligations.

This post will answer the following five questions to help you navigate tax compliance for online travel agency transactions:

What is an online travel agency? And what isn’t?

How do online marketplace facilitator laws affect online travel agencies, who’s responsible for collecting sales tax for online travel agency transactions, how does tax work for online travel agencies and marketplaces like airbnb, priceline, and vrbo, what are the tax compliance challenges for online travel agencies.

An online travel agency (OTA) is a web-based marketplace where consumers can research and book a variety of travel services, including, but not limited to, lodging. An online travel agency is not a metasite or similar platform that merely advertises for businesses without engaging directly or indirectly in transmitting communications and payments. Rather, an online travel agency provides a platform that allows multiple businesses to distribute accommodations and facilitate bookings.

Airbnb and Vrbo are also marketplaces but aren’t technically online travel agencies because they don’t provide the breadth of services offered by travel agencies online: cruises, flights, motor vehicles, etc. Nevertheless, we’re including them in this article because our focus is online lodging intermediaries and the tax challenges they face.

The relationship between an online travel agency and merchant can work in a couple of different ways: The online travel agency can be the merchant, or the hotel (or other lodging provider) can be the merchant. If the OTA is the merchant, consumers pay when they book; the rate type in this scenario is known as the prepay rate or merchant hotel rate. If the hotel is the merchant, consumers pay when they check in and the rate is known as the post-pay rate, agency rate, or hotel-collect rate.

Identifying the merchant of record is a key factor because it determines who’s liable for what taxes.

It’s also critical to determine whether an online travel agency or lodging platform is a "marketplace" for tax purposes. If you're classified as a marketplace facilitator, you may be subject to marketplace facilitator laws and so may need to pay tax on the net rate as well as on your markup (or margin). If you're not classified as a marketplace, for tax purposes, you may only need to pay taxes on your markup.

Lodging intermediaries are constantly evolving in response to changing consumer demand: Couchsurfing is a place to find “friends you haven’t met yet” who’ll let you crash at their place; Hipcamp is an online marketplace for “tent camping, RV parks, cabins, glamping, and more;” and the list goes on and on. “

As the industry grows and evolves,” notes a 2022 State Tax Research Institute report, “ the tax issues become more prevalent. ”

Some marketplace facilitator laws apply to certain online travel agencies or other lodging intermediaries. Some don’t. To understand why, it’s helpful to know the marketplace facilitator law origin story.

Marketplace facilitator laws were created to close a loophole. When states first required Amazon to collect and remit sales tax, Amazon dutifully did so. (Eventually.) But at first the online mega marketplace didn’t collect and remit sales tax on behalf of its third-party sellers, and it argued that it didn’t have to. It wasn’t the merchant in third-party transactions , it reasoned; it was merely the facilitator.

Amazon had a point, frustrating though that was for states. So, states developed marketplace facilitator laws that make online platforms the merchant for all transactions made through the platform. As the deemed seller the marketplace is responsible for collecting and remitting sales tax for third-party transactions as well as direct sales.

Because the initial focus of most marketplace facilitator laws was Amazon and similar marketplaces hawking things, most state marketplace facilitator laws didn’t reference online travel agencies. Gradually, that’s changing.

As of October 1, 2022, for example, Virginia requires online travel agencies to collect and remit applicable state and local taxes on room charges and fees. In other words, the online travel agencies generally must withhold tax on the net as well as their margin.

Conversely, marketplace facilitator laws in some states specify that online accommodations or lodging platforms are not marketplace facilitators and therefore aren’t liable for collecting and remitting taxes on the net amount. That’s the case in Washington state . However, online travel agencies are usually still liable for tax on their markup.

Regrettably, marketplace facilitator laws in some states don’t say one way or another. And sometimes tax requirements differ under different circumstances.

In Michigan , for example, an online travel agency generally isn’t required to collect and remit applicable accommodations taxes on the net rate so long as the accommodations provider itself is registered for Michigan sales tax. If the accommodations provider is not registered for sales and use tax in Michigan, as some short-term rental hosts are not, the online travel agency that facilitates the sale generally is required to collect and remit the tax due on the net rate. At a minimum, the OTA would generally need to pay the tax on their markup.

In Kansas, marketplace facilitators must collect and remit tax on third-party lodging (on the net rate), but not the net rate for hotel accommodations. Again, such marketplace facilitators are typically liable for the tax on their markup.

It depends on the taxing jurisdiction, the law, and the tax itself as well as who is the merchant of record and whether a markup is added.

Whenever multiple parties are involved in the sale or rental of accommodations, it can be difficult to determine which party is responsible for collecting and remitting the applicable taxes. “The online travel company or short-term rental marketplace is probably responsible for some of the taxes due,” explains Oliver Hoare, General Manager of Lodging and Beverage Alcohol at Avalara, “it just depends on how much. The margin only? Or the margin and the net?”

The lack of clarity can lead to the undercollection or overcollection of tax.

Marketplace facilitator laws may help, as noted above, but laws and tax obligations vary from state to state. Indiana requires online travel agencies and other marketplace facilitators to collect and remit sales tax and applicable county innkeeper’s tax on behalf of sellers (on the net and the margin). But in Washington, a business providing online travel agency services for short-term lodging is not a marketplace facilitator and therefore generally isn’t required to collect and remit lodging taxes on the net — only on the margin.

Marketplace facilitator laws aside, the most critical factor for tax liability purposes is identifying the merchant of record and whether they add a markup. “This is a vital point,” explains Hoare.

Who’s the merchant of record? What’s the markup got to do with it?

The merchant of record is the entity responsible for processing payments and collecting, remitting, or paying some or all of the taxes due on a transaction. Depending on the nature of the agreement, this description could refer to the online travel agency, a third-party supplier, or the lodging provider itself.

For example, an OTA could pay a wholesale rate for supply obtained from WebBeds (or a similar wholesaler) and then add a markup to the final consumer price. In this case, the online travel agency is the merchant of record. At a minimum, it would have to collect and remit tax on the markup, as no one else knows how much the markup is. If the online travel agency is classified as a marketplace facilitator for tax purposes and processes payments on behalf of the lodging provider, it would also be responsible for withholding and remitting the tax due on the net rate.

(Some lodging providers want the online travel agency to process payments; others prefer customers to pay at check-in.)

In short, an online travel company considered a marketplace for tax purposes would likely be responsible for taxes on both the net rate (or wholesale rate) and its markup. If there’s no markup and the platform doesn’t process payments or meet the definition of a marketplace, it may not be liable for any transaction tax at all.

So, you see, it depends.

How do local occupancy taxes complicate compliance?

There’s another complicating factor, as well. Even if an online travel agency is responsible for some taxes, it may not be responsible for collecting and remitting all the taxes due on the accommodations they facilitate.

Some states require online travel agencies to collect and remit state-level taxes on accommodations as well as any local taxes administered by the state taxing authority. However, online lodging marketplaces often aren’t required to collect and remit the local lodging taxes administered by city and/or county tax officials. In such situations, the lodging provider, host, or property manager is liable for the tax.

According to a 2022 survey by the National League of Cities, 82% of cities surveyed require short-term rental hosts to remit taxes directly to the city . Only 5% of the survey respondents require the online platform to collect and remit local taxes on behalf of the hosts.

As explained above, some states require online travel agencies and marketplaces like Airbnb, Expedia, and Vrbo to collect and remit at least a portion of the tax due (e.g., state-administered taxes), provided they meet the definition of a marketplace facilitator. Other states don’t — though OTAs and marketplaces are generally liable for any tax owed on their markup.

To simplify tax compliance for lodging providers that use the platform, a short-term rental marketplace not required to collect may agree to voluntarily collect certain lodging taxes for hosts through a voluntary collection agreement (VCA).

For example, a short-term rental marketplace like Airbnb or Vrbo may agree to voluntarily collect and remit applicable state taxes but not applicable county or city taxes. Or the marketplace may agree to collect state and county taxes but not city taxes. It depends on the marketplace and the agreement made.

Short-term rental marketplaces usually let hosts know they collect a portion of the tax due on their behalf and that the hosts could have additional tax obligations. However, they ordinarily don’t specify what those tax obligations are (e.g., city tax or county tax or both), and it would be unwise for them to do so. After all, they’re not tax advisors.

So, what do they say?

Airbnb calculates, collects, and remits taxes in areas where it has “made agreements with governments or is required by law to collect and remit local taxes on behalf of hosts.” But it doesn’t necessarily collect all taxes and so cautions, “As a host, depending on your location, you may be required to collect local tax … from your guests .”

Vrbo collects and remits lodging tax on behalf of hosts where required and notifies hosts when it starts to collect and remit lodging tax in their area. “ Property owners and managers are responsible for understanding and complying with the laws and regulations applicable to their property listing,” Vrbo reminds. “You’re also responsible for collecting and remitting lodging taxes when we’re not liable to do so.”  

Unfortunately, hosts that don’t read the fine print may think they’re off the hook for all taxes.

To summarize, an online travel agency or short-term rental marketplace may be required to collect some or all lodging taxes in one jurisdiction but have no obligation to collect and remit taxes in another jurisdiction. It may opt to collect some occupancy taxes voluntarily, or not. If it does collect some taxes for hotels or hosts, voluntarily or because it must, it may not collect all applicable taxes.

Tax tends to be a true pain point for online travel agencies and short-term rental marketplaces, which typically have a large footprint. As they facilitate bookings for hotels or hosts across the country, continent, or whole wide world, they must navigate a world of tax requirements.

In the United States alone, there are thousands of locally administered accommodations taxes . According to the State Tax Research Institute, “state and local accommodations taxes exhibit even greater diversity.”

States typically take one of five different approaches to taxing accommodations , ranging from a single statewide rate (with no additional local taxes) to three separate taxes: state sales tax, state accommodations tax, and local accommodations tax.

Given that, tax pain points for online travel agencies include:

Finding all relevant tax information (it’s often harder than it should be)

Registering for all required taxes with all required entities

Interacting with each individual locality

Navigating a lack of uniformity among locally administered taxes within one state

Correctly sourcing the transaction to ensure the proper taxes are applied at the proper rates (and ensuring transactions that should be exempt are exempt)

Correctly identifying when tax applies to fees

Filing a massive number of local returns and remitting local taxes (on top of filing state returns and remitting state-administered taxes)

Dealing with compliance and enforcement

“Basically, you have to pay the right people in the right way at the right cadence in the right format,” says Hoare. Fortunately, you can automate the calculation, collection, and remittance of hospitality-related taxes .

The risks of noncompliance are real. In 2015, the Hawaii Supreme Court ruled that nine online travel companies owed up to tens of millions of dollars in back taxes to the state for selling Hawaii hotel rooms over the internet. The same year, online travel agencies had to pay the District of Columbia more than $60 million in unpaid sales tax. The laws in both cases predated the existence of online travel agencies, but the courts determined they fit the definition of a vendor responsible for collecting and remitting the tax due.

State and local governments are gradually clarifying the tax requirements of online travel agencies, but they’re not necessarily making it easier for the online marketplaces to comply with them.

Avalara can help solve the compliance challenges online travel agencies face .

Updated: Take another look

Find out in the Avalara Tax Changes 2024 Midyear Update.

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Royal Caribbean International

Is Travel Agent Charging Sales Tax Legit?

By Soundview77 , February 14 in Royal Caribbean International

Soundview77

For the first time in 20 years of cruising I used a travel agent to book a cruise as it is

a group cruise for special needs guests and I'm traveling with someone who will

benefit from that.

My initial invoice showed the price of the cruise + fees/port tax less my deposit,

no mention of sales tax.

My final invoice now shows sales tax on the cost of the cruise. I never had that

when I booked direct with the cruise line.

I am in New York, travel agent is in Florida, cruise line is Royal. Is the sales tax a legit charge?

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@Ourusualbeach might know. I havent seen a additional taxes on top of the port fees and taxes. Maybe it's how it's broken out. It says a percentage tax on the cruisefare? What percentage?

15 minutes ago, Soundview77 said: For the first time in 20 years of cruising I used a travel agent to book a cruise as it is a group cruise for special needs guests and I'm traveling with someone who will benefit from that. My initial invoice showed the price of the cruise + fees/port tax less my deposit, no mention of sales tax. My final invoice now shows sales tax on the cost of the cruise. I never had that when I booked direct with the cruise line. I am in New York, travel agent is in Florida, cruise line is Royal. Is the sales tax a legit charge?

The TAs I've used, local and online (wherever they are located) haven't charged an additional sales tax.

31 minutes ago, Soundview77 said: For the first time in 20 years of cruising I used a travel agent to book a cruise as it is a group cruise for special needs guests and I'm traveling with someone who will benefit from that. My initial invoice showed the price of the cruise + fees/port tax less my deposit, no mention of sales tax. My final invoice now shows sales tax on the cost of the cruise. I never had that when I booked direct with the cruise line. I am in New York, travel agent is in Florida, cruise line is Royal. Is the sales tax a legit charge?

Where are you sailing TO?

Shouldn’t your query be addressed to the TA to ask what/why they are charging extra?

Sailing to Cococay and Cozumel.

I will ask the TA but I thought I'd poll the audience first since there are

many members here that use a TA, I'd like to know if it's common practice

Another_Critic

May be the Bahamas Tourist Tax?

"The Bahamas government will also add a $5 environmental tax and $2 (£1.60) tourism enhancement tax for cruise guests.

Some cruise lines will include port fees in the cost of their package, while others will pass it on to guests as an additional charge.

The new charges will be introduced from January 1, 2024."

It's not the Bahamas Tourist Tax.

It's labeled as sales tax and it's in the several hundred dollar range.

WrittenOnYourHeart

I'm thinking it could just be that they're breaking it down because the extra on my invoice - at least on Celebrity - is "taxes, fees, and port expenses".

23 minutes ago, Soundview77 said: It's not the Bahamas Tourist Tax. It's labeled as sales tax and it's in the several hundred dollar range.

Did the final price change or is it simply an additional breakdown of taxes/fees?

Also, is this on the travel agent invoice or RCI invoice?

My travel agent invoice lists: Fare 693.00 Taxes 538.94 Total 1,231.94

RCI invoice lists: Cruise Fare 1,113.00 Taxes/Fees/Port Expenses 118.94 Total 1,231.94

1 hour ago, Soundview77 said: It's not the Bahamas Tourist Tax. It's labeled as sales tax and it's in the several hundred dollar range.

Have you booked excursions on Cococay? Although several hundred $$ seems an excessive tax. Do you have a cabana?

I spoke with the travel agent.

The wording and breakdown of the second invoice to make final payment was different

than the original invoice, similar but more confusing as to what was mentioned in post #9.

It's all good. No sales tax.

Thank you to everyone who replied.

31 minutes ago, Soundview77 said: I spoke with the travel agent. The wording and breakdown of the second invoice to make final payment was different than the original invoice, similar but more confusing as to what was mentioned in post #9. It's all good. No sales tax. Thank you to everyone who replied.

So the total amount was the same? Just broken down differently?

I wasn't looking at the bottom line, .......got distracted by the breakdown being different than I expected.

I had a TA do something similar. Then the crane fell on Oasis.

What I discovered was that from Royal‘s perspective my cruise fare was that lower amount that the TA had identified as being the cruise fare and the sales tax amount was basically the agency commission, markup, profit and maybe a few other things.

This became important because when it came time to issue the 100% FCC that Royal offered for canceling the cruise when the crane fell on Oasis, my cruise fare was that lower amount and that was the basis of how Royal determined my FCC. Everyone else who booked on the website or a reputable TA received a much higher FCC while my FCC was lower because of the wholesale or whatever funky rate the TA used in obtaining my cruise fare.

The overall cruise total was correct, but the portion that Royal decided was the cruise fare was lower through this TA, and therefore my FCC was lower.

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4 Tax Tips for Travel Agents

Written by: Stephanie on March 25, 2024

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Taxes can be a headache, especially for small business owners like travel agents. What materials do you need to gather? Which forms do you need to complete? How do you know if you have proper documentation? Who do you contact if you have questions? Let’s make your tax season easier than ever with our tax tips for travel agents!

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4 Tax Tips for Travel Agents:

1. know your deductions.

Can I deduct travel expenses for a FAM trip ? How about the cost of my work computer? Is there a deduction for my home office space? From the tools you use to run your small business to the space you work from, there are many deductions that travel agents can claim on their tax returns. It’s best to keep track of your business expenses throughout the year so that when tax time comes, you have an organized record of the deductions you may be eligible for.

2. Keep those receipts organized

With any deductions you include on your tax forms, you’ll want to have sufficient documentation as proof. That’s why keeping your receipts organized throughout the year is so important. It’s helpful to file receipts in a dedicated place or folder in your email so that you can easily keep track of them. This helps prevent the deletion of important messages or a lengthy search of your inbox when tax time arrives.

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3. Work with a professional…or at least use professional software

As you begin preparing your tax documents, you may wonder what should or should not be included, or have questions about required information, proper forms, business expenses, and deductions.

Consider working with a local tax professional. A professional can help you during tax time, and can be a resource for your questions throughout the year.

If you intend to file your taxes yourself, use tax software that can walk you through the options for your small business filings. Many of these online programs also offer live support and have professionals available to review your tax returns.

4. Budget for your taxes

Owning a small business often means that taxes aren’t automatically withheld from the income you receive. That’s why it’s important to understand your business’s financials and plan for tax season all year long. Working with a tax professional or an accountant can help you understand how to budget for tax payments at a federal, state, and local level so you aren’t surprised when filing time comes.

Are you ready to start your own travel business and become a travel agent? KHM Travel Group supports people across the United States as they start and grow their travel businesses. For more information fill out the form to the right or give our team a call at 888.611.1220.

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U.S. Sales Tax Explained for both U.S. and Non-U.S. Sellers

Jennifer Dunn , January 31, 2017

Table of Contents

Most sellers in the United States find U.S. sales tax difficult to understand, so it stands to reason that international sellers would find it even more perplexing! Since Sellics works with customers who are based in the U.S. and around the world, we’re going to start by giving you an overview of how the U.S. Sales tax system works. After that, we’ll provide some sales compliance options for international sellers doing business in the U.S. Let’s dive in!

The Basics of U.S. Sales Tax

The United States has no national sales tax. This means that each individual state decides how sales tax is governed. Forty-five individual states and the U.S. Capital, Washington D.C., have a sales tax. (Washington D.C. is not a state, but it operates like a state for the purposes of sales tax compliance.) Five U.S. states do not have a sales tax at all.

States use tax revenues pay for state budget items like schools, roads, and public safety. These items are governed at the individual state level and can vary widely between states. Because of this, sales tax rules, rates, and regulations are different in each state that collects sales tax.

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A good example of this variance is with groceries—some U.S. states consider groceries to be subject to tax, while others consider groceries to be non-taxable.

As an online seller, you will notice that some states will also tax shipping charges that you charge to your customers to ship products . Other states do not tax shipping.

The main thing to keep in mind is that your company might have a relationship with one or more individual state governments for purposes of sales tax compliance. For more information on specific states, here’s a guide to find out more about sales tax in each U.S. state.

Does Your Business Need to Collect U.S. Sales Tax?

Sales Tax Nexus

U.S. states can only require sellers to charge sales taxes if that seller has “ sales tax nexus ” in that state. Nexus simply means that your business has significant presence in that state. Here are some of the factors that can establish nexus in a state:

A Physical Presence - Such as a home office, warehouse, store, or other location

Affiliates - Someone who sends customers to your online store for a percentage of the profits from a sale

Personnel - Employees, salespeople, and even some contractors can establish nexus

Drop Shipping - A situation where you have a relationship with a supplier to ship inventory to your customers

Selling items at a trade or craft show

Inventory - If you store goods for sale in a state, sales tax nexus is usually created. If you’re a seller who makes use of third-party fulfillment services like Amazon FBA you’ll generally have sales tax nexus in states where your products are stored for sale

When Do International Sellers Need to Collect U.S. Sales Tax?

The short answer is that a state will consider you liable to collect sales tax if your business has sales tax nexus in that state. There are a few different scenarios where non-U.S. sellers may have nexus in the United States.

If you live and run your business inside the U.S. but are not a U.S. Citizen - Non-U.S. citizens who are running a business in the U.S. are still considered to have sales tax nexus and are required to abide by sales tax laws as if they were U.S. citizens.

If you live outside the U.S. but have sales tax nexus in a U.S. state - If your business meets any of the criteria for nexus in a U.S. state, that state will require that you register for a state sales tax permit and collect sales tax from all buyers in that state. It is important to note that you should never collect sales tax from U.S. buyers without a sales tax permit. This is considered unlawful! Make sure you keep in mind that five U.S. states do not have a sales tax—Alaska, Delaware, Montana, New Hampshire, and Oregon. This means that you won’t be required to collect sales tax in those states, even if you have a location, employees or inventory there.

If you live outside the U.S. and have no sales tax nexus in the U.S. - In this case you won’t have to worry about registering for a sales tax permit and collecting taxes. You might still make sales to customers in the U.S., but if you do not have sales tax nexus in any U.S. states then you do not have to collect U.S. sales tax. Congratulations!

How can U.S. Sellers Become Sales Tax Compliant?

Having sales tax nexus in one or more states means that state requires you to register for a sales tax permit with the tax department for that state (generally called the State’s “Department of Revenue”). Once you receive your sales tax permit, you’ll need to collect sales taxes on from all of your customers in those states when taxable sales are made.

When you receive your state sales tax permit you’ll also be assigned a sales tax filing frequency—generally monthly, quarterly, or annually. Most states will make your business file more frequently if you have a large sales volume.

When you file you’ll need to figure out how much sales tax you’ve collected from your customers in each individual state. Most states will also require you to break down your sales by local areas within each state and usually categorized into cities, counties, and other special taxing districts. This can be daunting, but sales tax automation technology can connect to your marketplaces and online shopping carts to simplify this process.

These are the basics of how sales tax works in the U.S. If you’d like to go on a deep dive in the topic, check out our Sales Tax 101 for Online Seller s guide.

How can Non-U.S. Sellers Become Sales Tax Compliant in the U.S.?

To be honest, becoming compliant with U.S. sales tax is quite complex for international sellers. You’ll most likely want to work with an accounting firm (e.g. Osome or similar) who specializes in helping non-U.S. sellers get compliant, but before you get to that point here are a few actions you can take:

Determine where you have nexus - Use the ground rules posted above to determine the states where you have nexus. If you sell via Amazon’s FBA program you can view your Inventory Event Detail report to see which states have Amazon warehouses that store your inventory. You can also sign up for a 30-day free trial of TaxJar that will display the states from which your products have recently shipped.

Register for a sales tax permit in your nexus state(s) - Here’s where most international sellers hit their first roadblock. Most states require that you have an Individual Taxpayer Identification Number (ITIN) to register for a permit. In addition, many states have online systems that cannot handle sales tax permit applications from outside the U.S. and you may be required to call the state to register or fill out a paper sales tax form and mail it to the state.

Open a U.S. bank account - Most states only accept sales tax payments using Automated Clearing House (ACH) transfers from a U.S. bank, which means you may be required to open a U.S. bank account. Opening a U.S. bank account will normally require either you or a business representative to be physically present when opening the account.

Fortunately there are multiple sales tax experts who have years of experience in helping international online sellers get sales tax compliant in the U.S.

Here are two U.S.-based tax firms that we have vetted and currently recommend:

Peisner & Johnson

Sylvia Dion, CPA

You could also look for a sales tax firm in your country that can assist your business with becoming sales tax compliant in the U.S.

Our goal is to help point you in the right direction when it comes to U.S. sales tax compliance no matter where you’re located. If you have any questions or any comments about your experience with dealing with U.S. sales tax, go ahead and start the conversation in the comments!

TaxJar is a service that makes sales tax reporting and filing simple for more than 7,000 online sellers. Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!

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Type: Model Policy
Status: Final
Date Finalized: September 19, 2010
Date Amended: August 9, 2020
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Section 1. {Title} This Act may be cited as the “Travel Agent Tax Fairness Act.”

Section 2. {Legislative Findings} The Legislature finds that:

(A) Travel agents and online travel companies provide valuable services to travelers, showing comparisons of rates and amenities offered by multiple, competing hotel operators.

(B) These facilitation services are distinct from the provision of a room by the hotel where the traveler eventually stays.

(D) Sales taxes on hotel room and hotel occupancy taxes should not be imposed on services provided by travel agents and online travel companies.

Section 3. {General Rule}

(A) Notwithstanding any other provision of law to the contrary, any tax imposed on or collected in relation to any transient accommodations, whether imposed as a sales tax, a hotel tax, occupancy tax, or otherwise, shall apply solely to amounts received by the operator of a hotel, motel, tavern, inn, tourist cabin, tourist camp, or other place in which rooms are furnished to the public.

(B) Under no circumstances shall a travel agent or intermediary be deemed an operator of a hotel, motel, tavern, inn, tourist cabin, tourist camp, or other place in which rooms are furnished to the public unless such travel agent or intermediary actually operates such a facility.

(C) This section is intended to clarify that taxes imposed as a sales and/or hotel tax, occupancy tax, or otherwise, shall apply solely to amounts received by operators, as enacted in statutes authorizing such taxes.

Section 4. {Effective Date} This Act will become effective immediately upon signature by the Governor.

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Small Business

Online Travel Agencies Face a Virtual World of Tax Obligations

In the United States alone, there are thousands of locally administered accommodations taxes. According to the State Tax Research Institute, “state and local accommodations taxes exhibit even greater diversity.”

Jul. 26, 2023

By Gail Cole

This post will answer the following five questions to help you navigate tax compliance for online travel agency transactions:

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What is an online travel agency? And what isn’t?

How do online marketplace facilitator laws affect online travel agencies?

Who’s responsible for collecting sales tax for online travel agency transactions?

How does tax work for online travel agencies and marketplaces like Airbnb, Priceline, and Vrbo?

What are the tax compliance challenges for online travel agencies?

Identifying the merchant of record is a key factor because it determines who’s liable for what taxes.

It’s also critical to determine whether an online travel agency or lodging platform is a “marketplace” for tax purposes. If you’re classified as a marketplace facilitator, you may be subject to marketplace facilitator laws and so may need to pay tax on the net rate as well as on your markup (or margin). If you’re not classified as a marketplace, for tax purposes, you may only need to pay taxes on your markup.

Lodging intermediaries are constantly evolving in response to changing consumer demand: Couchsurfing is a place to find “friends you haven’t met yet” who’ll let you crash at their place;

Hipcamp is an online marketplace for “tent camping, RV parks, cabins, glamping, and more;” and the list goes on and on. “As the industry grows and evolves,” notes a 2022 State Tax Research Institute report, “ the tax issues become more prevalent. ”

Marketplace facilitator laws in some states now specify “marketplace” includes a lodging marketplace or online travel agency, and the lodging marketplace or online travel agency is responsible for collecting and remitting sales and/or lodging taxes on behalf of the lodging providers using the platform. As of October 1, 2022, for example, Virginia requires online travel agencies to collect and remit applicable state and local taxes on room charges and fees. In other words, the online travel agencies generally must withhold tax on the net as well as their margin.

Regrettably, marketplace facilitator laws in some states don’t say one way or another. And sometimes tax requirements differ under different circumstances.

It depends on the taxing jurisdiction, the law, and the tax itself as well as who is the merchant of record and whether a markup is added.

The lack of clarity can lead to the undercollection or overcollection of tax.

Who’s the merchant of record? What’s the markup got to do with it?

(Some lodging providers want the online travel agency to process payments; others prefer customers to pay at check-in.)

So, you see, it depends.

How do local occupancy taxes complicate compliance?

So, what do they say?

Unfortunately, hosts that don’t read the fine print may think they’re off the hook for all taxes.

Given that, tax pain points for online travel agencies include:

Finding all relevant tax information (it’s often harder than it should be)
Registering for all required taxes with all required entities
Interacting with each individual locality
Navigating a lack of uniformity among locally administered taxes within one state
Correctly sourcing the transaction to ensure the proper taxes are applied at the proper rates (and ensuring transactions that should be exempt are exempt)
Correctly identifying when tax applies to fees
Filing a massive number of local returns and remitting local taxes (on top of filing state returns and remitting state-administered taxes)
Dealing with compliance and enforcement

State and local governments are gradually clarifying the tax requirements of online travel agencies, but they’re not necessarily making it easier for the online marketplaces to comply with them.

Gail Cole is a Senior Writer at Avalara . She’s on a mission to uncover unusual tax facts and make complex laws and legislation more digestible for accounting and business professionals.

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Online Travel Agencies Must Pay $60 Million in Sales Tax to District of Columbia

Dennis Schaal, Skift

July 24th, 2015 at 4:08 PM EDT

Chalk up a victory for one big city and the hotel industry, which likes to see the online travel agencies' get squeezed. The case dealt with sales taxes on hotel sales and a not the more common occupancy taxes. It was harder for online travel agencies to argue they aren't "vendors" than it is for them to convince courts that they are not "hotel operators."

U.S.-based online travel agencies lost a hotel sales tax case in a high-profile jurisdiction — the nation’s capital.

Major online travel agencies, including Expedia, Priceline and Orbitz, will have to pay the District of Columbia more than $60 million in unpaid sales tax dating back to 1998, according to a July 23 ruling by the District of Columbia Court of Appeals.

The court upheld a Superior Court ruling that the online travel agencies are “vendors” that are subject to sales tax on the retail rates they charge consumers, including the online travel agencies’ service fees, and not just for the sales tax on the net rate that they collect from consumers and hand over to hotels.

The American Hotel & Lodging Association and the Hotel Association of Washington, D.C. hailed the ruling (embedded below).

“We are thrilled that online travel companies will be required to pay their fair share of taxes in the District of Columbia,” said Solomon Keene, president of Hotel Association of Washington, D.C. “This decision not only reinforces our position that these taxes are owed to District taxpayers but hopefully also sends a message to OTCs that the days of misleading consumers are over.”

It wasn’t an all-encompassing win for the District of Columbia, however. The District, which sued the online travel agencies in 2011, had argued that the online travel agencies should also be held liable for sales tax on the net rate that they collect from guests and transmit to hotels, which pay the tax to the District. The District alleged that the online travel agencies should essentially be responsible for sales tax on the sales tax that they were already collecting for hotels because the online travel agencies didn’t specifically detail these charges to customers but lumps them together as “taxes and fees.”

“… the District points out that the online travel companies’ failure to make a separate statement worked ‘to the detriment’ of their customers and so there must be some consequence for that,” the appeals court ruled. “Not only is this sort of punitive taxation not provided for in the text of the sales tax law, however, but it is also not clear how the OTCs’ payment of more money to the District is going to somehow make those customers whole.”

Chalk up a victory for one big city and the hotel industry, which likes to see the online travel agencies’ get squeezed. The case dealt with sales taxes on hotel sales and not the more-common occupancy taxes. It was harder for online travel agencies to argue they aren’t “vendors” than it is for them to convince courts that they are not “hotel operators.”

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Photo credit: President Obama's armored Cadillac limousine parked outside an entrance to the St. Regis Hotel, Washington, D.C. on March 13, 2013. Stephen Melkisethian / Flickr.com

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10 Tax Tips for Travel Advisors for 2020

Here are some useful tips to help prepare travel agents and travel agencies for the upcoming tax season. Photo: Shutterstock.com

As the New Year approaches, so too does tax season, and as the travel industry prepares for an influx of new travel destinations and tour offerings, agency owners and travel professionals should also keep an eye on their financial records.

To help advisors and agency owners better manage their businesses and prepare for the upcoming tax season, Angie Rice, co-owner of Boutique Travel Advisors, and Jennifer Hand, owner of Jennifer Hand Travel Pro, have shared some of their insights through their experience both as CPAs and travel advisors.

To that end, here are some useful tips to help balance your books, protect your private information, and generally manage your business before tax season arrives.

1. Know what and when to expense. For travel advisors and agency owners, knowing what to expense is important. From fam trips researching new destination offerings, to furniture and equipment for your small business, deducting business expenses is key to managing your affairs while still staying profitable. But knowing what and how much to expense is essential to keeping the IRS off your back.

As far as deductions go, the most important thing to know is that whether or not you choose to deduct something is largely up to you, but it’s up to the IRS to determine if those deductions are valid. If you get caught mismanaging your funds, you could be under scrutiny for years, so it makes sense to get some good advice and be reasonable with your deductions. If you go overboard and get audited even one time, it’s not going to be worth it.

You really have to think about every deduction as having to directly benefit your business, and you have to always be able to justify your expenses, and how they help run your business.

For example, when Angie Rice goes on fam trips or checks out bookable destinations for her clients, she makes sure to make the most of it. “I’m taking notes, I’m following up with clients, I’m posting on social media, and typically, my trips result in three to four bookings within a three- to six-month period after my travel. So I can clearly justify, if I ever need to, to the IRS, that my travel had an impact on my income, and therefore was a justifiable expense.

“It’s no different than a retailer going on a trip to New York to look at the latest fashions. When travel advisors are going to new markets to really see what would appeal to their clients,” said Rice, “by all means, that’s a business expense.”

2. Home-based advisors can deduct home-office expenses. Home-based advisors have the option to deduct reasonable expenses for their home office.

“A lot of your home expenses can be deducted in some form or another,” said Hand. “However, there are implications for when you sell your house, if certain deductions were used. Again, just be reasonable and save whatever you’re going to need to justify it.”

You can write off a portion of your office space that’s used for your business. Additionally, if you furnish the office in your home, that would also be a depreciable asset that can lower your taxes.

3. Don’t be too aggressive with your deductions. “One of the biggest mistakes I see advisors making is they’re overly aggressive with their deductions and not keeping good records,” said Hand.

Advisors should be careful when they decide to write off things like vehicles. You should take the precautious route of writing off your mileage, so if you’re [going] to and from the airport, etc., the IRS has a standard rate they apply per mile. This might be a better approach to adopt because it’s hard to justify that a car is being solely used by a travel advisor for business purposes.

“And the biggest mistake I see is people intermingling funds between cash and credit card. It is always best to keep all your business transactions flowing on business,” said Hand. “It’s just easier and makes things look more professional.”

4. Know where to go for reliable tax information. “The IRS has a great website. I’ve found it to be very user-friendly for consumers, including travel advisors,” said Rice. “And often associations like ASTA do a wonderful job of providing information for travel agents that are business owners, and they sometimes cover tax topics as well.”

Advisors should also check their local networks. Ask people who own small businesses, whom they use for their business taxes. If you find a small business owner, or especially a travel agency owner, find out who gives them tax advice and who does their taxes. You can pay for a one-time consultation, and just have someone go over your financial records, and talk you through how best to handle your taxes.

5. Protect your personal and business data. When it comes to protecting your business data and client information, one can never be too careful. Whether you have clients send you their documents through paper or email, don’t ever transmit vital client information in an insecure, non-PCI compliant way.

“You want to make sure that you keep that information secure,” said Rice. “Make sure that, when you’re web hosting to the extent that clients are providing information, you want to make sure that you’re working with a host for your website that keeps that data secure.

“A lot of travel agents take down credit card information and then destroy the information after they’ve made the booking.” They don’t save the client’s credit card info, they just reobtain it from returning clients when they’re ready to book.

To the extent that you have more of a paper-based business, a lot of those agents choose to take their information and shred it so that they don’t have a copy between booking clients. It might be slightly less convenient to have clients resubmit their documents before every booking, but these methods help protect their private information, and make your business more secure.

A good CRM is also a great long-term investment for advisors concerned about cyber security.

6. Know what to look for in a CPA. It doesn’t matter how much you think you know, or what kind of software you have, it really does pay to use a good accountant. But make sure the tax professional you use is well-versed in the workings of your particular business.

“You don’t have to use an expensive accountant, but you really do want someone who is savvy in your business structure, and the type of business you have, and the type of expenses you have,” said Hand. “Even though I hold a CPA license, I knew that business taxes weren’t my forte. I’ve gotten some really good advice that saved me a lot of money over time by using a tax professional.”

Tax professionals have different niches, so finding a tax accountant, or preferably a CPA that has experience working with other travel advisors, or in industries that run and are similar to travel agencies, will be instrumental in pairing advisors with the right tax professional. Make sure you explore all of the factors of your business to find the best tax professional to meet your needs.

“In this day and age, it’s really easy to connect with local travel professionals and small business owners in your area to ask for a referral,” said Hand. “The best CPAs are always found through word-of-mouth, through referrals. But local bankers and small business accountants are resources that can also help.”

7. Budgeting is key. The best way to plan for taxes is to plan for all of your expenses, according to Hand. “Budgeting is something that most travel professionals don’t really pay attention to. We’re worried about finding clients, about learning products, and getting bookings and collecting final payments, but you should be operating from a budget.”

Advisors should be paying attention to how much money is coming in and going out. “It’s easy to get caught up and totally lose track of how much money you brought in for the year. Then you get to the end of the year, and you either owe a lot of taxes or you really haven’t been profitable.”

Budgeting is key, and doing financial statements or closing your books formally once a month is ideal, once a quarter is minimum. That will really help keep you on track, keep a closer eye on your business, and give you an idea of how much you’re going to owe in taxes.

8. Understand the difference between ICs and employees. “I think as it relates to travel advisors, we’re hearing a lot about the IC [independent contractor] model, particularly in California and now on the East Coast,” said Rice. “When looking at Independent contractors versus employees, I think it’s important if you have independent contractors that you really understand the rules, the laws, and the tax consequences that are involved.

“If you’re looking to work with independent contractors over employees, you’re going to want to work with a tax accountant that can help you.” It’s essential that agency owners understand how these different factors will ultimately affect their businesses.

9. Don’t get mislabeled by the IRS. Be careful how you treat your business. There is a difference to the IRS between hobbyists and businesses. “You can’t treat your travel agency like a shelter to put a quarter of your cable and internet and water and mortgage,” said Hand. “I mean, you can try it, but whether it sticks or not is up to the IRS.”

While this advice isn’t relevant to all, or even most travel professionals, it’s something everyone should keep in mind in order to avoid being mislabeled or called out by the IRS.

“Don’t be posting on social media that this is a part-time gig,” said Hand. “The IRS is not going to let you treat your agency like a full-time business out of your home with all those deductions if you’re only working an afternoon a week, or a few times a month.”

10. Keep track of your receipts and financial records. This should go without saying, but advisors really need to keep their financial records as complete as possible.

“Oftentimes, you’re traveling to meet clients, meeting over coffee or lunch. These can result in a sizeable number of incidental costs,” said Rice. “These expenses, meals and entertainment, can be justified as a business expense.” But without a well-maintained record of the expenses, it may end up costing you even more out-of-pocket in the future.

The IRS doesn’t necessarily need all of your receipts. Often your bank statements can show your expenses and how they relate to your travel business. But you really do need to keep records as complete as you possibly can.

“I always keep my receipts. I write who I had lunch with, I write the date, and whether it’s a client or a supplier. And at the end of the month, I update all my accounting records, so that by the end of the year, I’m up to date.”

*A special thanks to Angie Rice of Boutique Travel Advisors, and Jennifer Hand of Jennifer Hand Travel Pro for contributing their time and insights to this article.

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We sat down with the head chef at Explora Journeys to learn more about how cuisine at sea has evolved.

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Taxation of Online Travel Services: Lawsuits Generally Not Succeeding In Effort to Expand Hotel Taxes

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Key Findings

Local officials in 25 states and the District of Columbia have sought to reinterpret hotel occupany tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. ordinances to apply to amounts paid by consumers to online travel booking services, with limited success. OTCs have prevailed in cases in 18 states, while governments have prevailed in cases in 3 states and the District of Columbia. Cases are pending in 5 states.
In traditional hotel transactions, travelers book a room and pay a hotel tax based on the amount they pay to the hotel. Online travel companies (OTCs) facilitate such transactions between consumers and hotels, and keep part of what the consumer pays as a service fee.
OTCs neither operate hotels nor resell hotel rooms as wholesalers, placing them outside the proper scope of hotel occupancy taxes.
Most U.S. states and cities do not tax services, so taxing only Internet-based travel facilitation services (and doing so at a high rate) suggests that the real motivation is to shift tax burdens to nonresidents, burdening the free flow of interstate commerce.
Local governments should not expect easy revenue from pursuing such claims.

Introduction

A number of lawsuits have been filed recently by cities and counties claiming that online travel companies (OTCs, such as Expedia, Hotels.com, Orbitz, Priceline, and Travelocity) are in violation of their hotel occupancy tax ordinances. [1] The suits claim that hotel occupancy tax should be paid on the amount of hotel reservation transactions that accrues to the OTC, described variously as a facilitation fee, service fee, commission, markup, or difference between the “retail” and “wholesale” rates. Altogether, some 70 lawsuits have been filed in 25 states and the District of Columbia.

Put another way, the question is whether hotel occupancy taxes should be calculated based either (1) on the amount the hotel receives, or (2) on the amount the consumer pays. In the former case, hotel tax is imposed only on the hotel’s charge for the accommodation. In the latter case, any money spent in procuring accommodations is conceivably subject to hotel tax, even if the money is spent on other services such as an online travel service, travel agent, personal assistant, or conference booking coordinator. In all but three states, services are generally exempt from sales taxation. [2]

City litigation efforts have also raised other serious questions by attempting to judicially enforce new interpretations of hotel occupancy tax statutes rather than pursuing legislative amendments, acting outside of established administrative procedures, and engaging in questionable oversight due to the hiring of private contingency-fee lawyers to pursue these lawsuits. In many cases, contingency lawyers seeking to litigate in this area actively encourage states and localities to pursue legislation designed to improve their chances of obtaining a favorable court judgment.

To date, judges have shown skepticism of the cities’ claims, with OTCs prevailing in 18 of the 25 states where lawsuits have been filed; cases in five states remain pending while the governments have prevailed, at least initially, in three states plus the District of Columbia. Many cities have backed off pursuing litigation as it became clear that easy revenue would not be forthcoming, contrary to proponents’ claims. Nevertheless, due to the continuation of this trend and the increasingly serious impact it has on interstate commerce (somewhere between 5 and 25 percent of hotel bookings are now done through OTCs [3] ), federal legislation may be forthcoming to halt local hotel tax predation and preserve the status quo of hotel taxes based only on hotel occupancy.

Table 1 Status of Local Government Litigation Against Online Travel Companies as of March 2012

Booking a hotel room: the “merchant” model and online travel services.

If a traveler goes directly to a hotel’s website and books a room, the calculation of the hotel tax is simple. The traveler stays at the hotel and pays the hotel a room charge plus a local hotel tax base d on the room charge. If the amount paid by the traveler to the hotel for the accommodation is $100 a night, and the hotel tax is 15 percent, the tax owed is $15. No other parties are involved and no other amounts are paid by the consumer. The hotel keeps the room charge and forwards the tax money to the government. If a traveler books the room through a travel agent (the “agent” model), the hotel compensates the travel agent but this does not affect the amount received by the hotel from the customer, or the amount paid in tax.

When a traveler uses an online travel company to book the room (the “merchant” model), the traveler sorts through hotels on the OTC ‘s website and books the room there. Travelers pay one unified charge to the OTC, which encompasses the room rate agreed upon with the hotel (closely guarded, as hotels do not want other guests and competitors learning the amount of the discount given to OTC bookings), the taxes owed on that amount, and the remainder, which is kept by the OTC as a facilitation fee. After the hotel stay has occurred, the hotel bills the online travel company for the amounts owed, and the hotel is responsible for forwarding taxes to the government.

For example, assume the hotel agrees to a contract whereby it will receive only $70 a night for any OTC -facilitated rentals of the normally $100-a-night room (plus $15 in tax). Hotels agree to such contracts because they can reach a market through the OTC that they would not otherwise reach. If the traveler using the OTC website books the room at $90 a night inclusive of taxes and fees, $70 is forwarded to the hotel as a room charge, 15 percent of that amount ($10.50) is forwarded to the hotel to pay hotel taxes to the government, and the remainder ($9.50) is retained by the OTC as its service fee on the transaction.

A typical lawsuit claims, “[T]he internet travel sites negotiate room prices with hotels at a wholesale rate, then charge travelers who book through their websites a higher retail rate. However, the companies remit taxes only on the lower wholesale rate.” [4] It is a seductive argument that apparently won the day in the Texas case, as commentator Billy Hamilton describes:

The jury was told, ‘if you buy a shirt at J.C. Penney, you pay tax on the total price of the shirt not some wholesale price with part of the price carved out from tax.’ It’s an interesting analogy, Cindy Ohlenforst, an attorney for one of the online booking companies, told me… But suppose you hired a neighbor’s teenager or a personal shopper to buy the shirt. Let’s say the shopper found a shirt for $80 at Walmart and charged you $20 for her time. In that case, you haven’t bought a shirt for $100. You’ve bought an $80 shirt and you’ve paid $20 for nontaxable services. [5]

In the online travel company context, there is no “wholesale” purchase followed by a “retail” sale, but rather one retail transaction that has a room rental component and a service component. This service provider or “merchant model” existed long before online service providers, in the form of bundled packages of hotel accommodations with other services.

Online Travel Services Are Generally Outside the Scope of Hotel Tax Statutes

While precise wording can vary, hotel tax statutes typically provide that hotel taxes are paid by hotel occupants based on the amount they pay to the hotel. Amounts paid by guests to others are not subject to the hotel tax. (Depending on what the transaction is, they may be subject to other taxes, and any company providing a service to a guest must pay income tax on the amount.)

While some cities (including New York City, South San Francisco, and Washington , D.C.) have legislatively changed their statutes to expand hotel taxes to amounts paid by the consumer to anyone connected with the hotel transaction, most cities have been reluctant to do so. Instead, they have filed lawsuits seeking to collect these amounts from OTCs, claiming that their activities fall under existing statutes as “hotel operators” or “hotel room wholesalers.” Such broad statutes could encompass not only online travel companies, but also travel agents, advertisers, or even paid secretaries or co-workers who help book travel. The Washington, D.C. statute has already been criticized by a friendly judge as “impossible to reconcile any meaning out of the confusion.” [6]

In most of the cases brought by the cities, courts have declined to extend the hotel tax statute to cover OTC services as beyond its plain meaning or intended scope. Even where a court has concluded that the statute could conceivably cover OTC services, they have generally declined to do so under the long-standing rule that ambiguous statutes with more than one possible interpretation should be resolved in favor of taxpayers. [7]

City Lawsuits Seek New Tax Revenue by Expanding Hotel Tax Base The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. to OTC services

A properly structured tax on goods and services should apply to all goods and services once and only once. Goods and services primarily used by nonresidents should not be subject to higher, discriminatory taxes. Further, a well-designed, principled tax system does not attempt to micromanage consumer decisions. Such a system minimizes tax distortion of investment and production decisions and avoids discriminatory taxation of nonresidents who use fewer services than residents and have no democratic recourse.

Unfortunately, states stray from these principles. Whole categories of transactions, primarily services but also politically favored investment and consumer actions, are exempt from sales tax ation. Business inputs are often taxed, resulting in multiple taxation. Nonresidents are made to bear a disproportionate share of the tax burden, through high taxes on items thought to be used primarily by them: restaurant meals, car rentals, and hotel rooms.

These two unprincipled efforts by states— exempting many goods and services from sales taxation while imposing high taxes on items thought to be used by nonresidents—have led directly to the online travel company disputes. State and local governments are loathe to tax services, like the service of booking a hotel room, in the belief that service providers are more likely to leave if taxation becomes excessive. But because officials want to extract more revenue from out-of-state travelers and out-of-state businesses, the result is an effort to tax only services provided by out-of-state and Internet businesses. As The Economist magazine recently summarized:

Business travelers are easy to tax. We dart in and out of town, we use easily taxable amenities like airports, hotels, and taxis, and, most important, we don’t vote—at least not in our destination cities. Every business traveller has probably spent a night in a hotel where both state and local taxes are added to travellers’ bills. [8]

Rather than correct or contain these misguided ideas, states and cities instead are looking for ways to expand them.

Many of the city lawsuits claim that the imposition of hotel tax on OTC services already exists and that they are simply attempting to collect tax amounts already owed. This is a disingenuous argument, since the collection of such taxes has not been expected prior to the lawsuits. In most cases, the hotel tax law is being amended or its interpretation dramatically changed, so it cannot reasonably be said that the taxes are owed yet “uncollected.” Even if a new law is not required for the city to press for payment, businesses (and ultimately, consumers) will be paying a higher rate of taxes to the government than before, which makes it a tax increase.

Consequently, claims of “revenue losses” are misplaced. The revenue was never to have been gained, so it cannot have been lost. In any event, good policy analysis goes beyond merely evaluating whether a proposal raises revenue. An idea might raise millions of dollars in new revenue but it would be a bad policy if it did so in a damaging way. As one Nevada attorney said on the issue, “[T]he law doesn’t change just because the economic times are tough right now.” [9] It is cynical to equate “might raise revenue” with “preventing revenue losses,” as it assumes what the analysis is meant to figure out: whether the taxation is lawful and justified.

The mischaracterization that online travel companies have collected taxes (or disguised taxes as other charges [10] ) but have not remitted them is similarly problematic, as it ignores the economic effects of taxation. Customers pay one total amount to the online travel companies, which then is divided among the hotel, the government, and the online travel company. The cities’ claim is essentially that some portion of the profit kept by the online travel company is in reality “owed” taxes.

In any event, state and local governments have other revenue-raising options aside from discriminating against nonresidents by applying taxes to services primarily used by the nonresidents, or only to online versions of services. As one commentator pointed out, “If states or localities want to raise more revenue, they could just raise the rate rather than argue about which price to apply it to…. Whatever the solution, it should be a well thought-out, comprehensive approach, and not this case-by-case approach that is draining resources from the companies, the localities, and the courts.” [11]

Cities’ Lawsuits Have Not Succeeded but Have Produced Extended Litigation and Negative Impacts on Tourism Industry

While the 70 related lawsuits filed in 25 states and the District of Columbia involve different statutes and different governments, there are commonalities. They generally involve claims by the local governments that online travel companies are in violation of their hotel occupancy tax ordinances due to a failure to pay the hotel occupancy tax on the amount of the transaction that accrues to the OTC, described variously as a facilitation fee, service fee, commission, markup, or difference between the “retail” and “wholesale” rates. The statutes in question usually do not explicitly speak to these services but the governments assert that the tax encompasses them.

Of those 70 cases, 26 cases have produced a judicial opinion on the merits. While there are cases pending or dormant, a review of the conclusions reached by judges weighing similar claims can be instructive. Two questions in particular come up with some frequency: (1) whether OTC s are “operators” of hotels and (2) what precisely the hotel occupancy tax taxes.

Court Rulings on Whether Online Travel Companies Are Hotel Operators

In 15 cases, judges specifically considered whether online travel companies are hotel “operators” for purposes of hotel occupancy tax statutes. The vast majority of the cases (12 out of 15) find that OTC s are not hotel operators. [12]

For example, in a case brought by Anaheim, California , the judge wrote:

OTCs do not control and run hotels… The hotel controls the production of the product sold (the hotel room and accompanying amenities), the quantity of production, the quality of production, the channels of distribution of the product (i.e., whether and what quantity of rooms will be made available through a particular intermediary), and the pricing of the product (whether sold directly to the consumer or to an intermediary). [13]

Further, rejecting a claim that OTCs are operators because they take on some reporting responsibilities associated with the transaction, the judge stated: “One cannot logically conclude, however, that because a hotel operator is required to furnish a receipt specifying the amount of taxes, therefore any entity that furnishes a receipt of some sort to the consumer must be an operator.” [14]

A Florida appellate court reached a similar conclusion:

The Defendants do not own, lease, operate or manage any hotels. They do not become involved in any of the myriad activities inherent in running a hotel business, from buying the property, to building or contracting the construction of the facilities, to staffing the various hotel operations or services, or to providing any hotel amenities. The individual hotels, not the online travel companies, register guests, establish check-in and check-out times and procedures, and set all the rules and procedures governing stays on that property…. Perhaps most importantly, the Defendants do not own or control the rooms for which they offer to obtain reservations. They do not rent a block of rooms in advance of booking, and then re-let those rooms to their customers; they are not obligated to make reservations for any minimum number of rooms; and there is no penalty if they do not assist in making a specific number of reservations. [15]

Similarly, the U.S. Court of Appeals for the Fourth Circuit, citing the Webster’s Dictionary definition of “operator,” concluded that “an online travel company is not a retailer because it is not a business of a type that is similar to a hotel, motel or tourist home or camp. As a result, an online travel company is not subject to the Pitt County occupancy tax.” [16] The U.S. Court of Appeals for the Sixth Circuit also found that “OTCs are not like or similar to the listed types of businesses because they ‘have neither ownership, nor physical control, of the rooms they offer for rent.'” [17] The Kentucky Court of Appeals concluded that OTCs are “merely a broker” rather than a provider of accommodations. [18] A federal judge in New Mexico found that OTCs are not “vendors” who furnish lodging, and instead “earn for their services, including providing their customers with the vast content on their websites….” [19] The Texas Court of Appeals explained the element of hotel operation that OTCs do not possess:

The hotel offers occupancy in exchange for payment of the invoiced discounted rate. An OTC, on the other hand, does not have rooms or occupancy; as Houston concedes, the OTCs do not have the right to use or possess hotel rooms. Instead, the OTCs have websites and provide information. The content of a given OTC ‘s website includes material provided by the hotel, which may include photographs, descriptions, and listings of the amenities and services available onsite—but the OTC also provides information about the hotel’s competitors. Visitors to the website can access maps, check room availability, and compare rates, ratings, and the reviews of other consumers… In sum, the OTC does not merely help the website visitor make a reservation; it also helps consumers make informed choices in spending their travel dollars, and to do so conveniently and efficiently. When the consumer pays the OTC, the payment includes compensation for these benefits. [20]

The three cases that have found otherwise did not conclude that OTCs physically operate the hotel but rather exercise control of some level to fall within the statute’s framework as a hotel operator. For example, the South Carolina Supreme Court found that the statute’s limitation to entities that are “in the business of furnishing accommodations” applies to OTCs because they “directly or indirectly, provide hotel reservations to transients for consideration.” [21] One justice dissented, claiming the majority defined the statute’s two mentions of “furnish” in two different ways. [22]

Similarly, a federal judge in Illinois focusing on the word “owner” found that while “[t]here is no dispute that defendants do not have an ownership interest in or conduct the operations of the hotels with which they do business,” the word “owner” should be interpreted as encompassing “anyone who receives the ‘consideration for the rental,'” such as OTCs. [23] Another federal judge, in the Western District of Texas, found “control” of hotels by OTCs, at odds with the Texas Court of Appeals and another federal judge from the Eastern District of Texas. In the class-action City of San Antonio v. Hotels.com, the judge found (relying on a jury verdict) that OTCs “control” hotels in that they step into the shoes of the hotel for the purpose of tax collection: “The OTCs have sole control over the decision to establish, change, or dissolve markups, services fees and/or surcharges as they wish.” [24]

These three decisions rely on legal sophistry, giving new meaning to words such as “own,” “furnish,” and “control” beyond their common understanding. In the vast majority of cases, courts correctly determined that OTCs are not akin to hotels and do not operate or control hotels.

Court Rulings on What Is Taxed by a Hotel Occupancy Tax

In twelve cases, courts focused on the scope of the hotel occupancy tax and what activities it is meant to tax. In nine of those twelve cases, the court concluded that OTC services are beyond the scope of the hotel occupancy tax. [25]

For example, a New York appellate court ruled that “the plain meaning of [the statute] did not encompass the service fees charged by the travel intermediaries and the legislation may not be extended so as to permit the imposition of the tax in a situation not embraced by it.” [26] The Missouri Supreme Court unanimously held that “the money [the OTC ] retains is compensation for facilitating a reservation, not providing a sleeping room,” outside the scope of a tax on amounts paid by hotel guests. [27] A federal judge in New Mexico found that because only a portion of a hotel guest’s payment ultimately goes to hotel operators, “[i]t would not make sense to interpret ‘gross taxable rent’ as the full amount charged by Defendants because only a portion of this amount is actually ‘paid to vendors.'” [28]

An Alabama circuit court judge concluded that OTCs perform facilitation services and are not in the business of renting or furnishing rooms:

The plaintiffs object to the use of the word ‘facilitate’ in defining the defendant’s activities, but the undisputed facts show that that is what they do. They facilitate, or make easier, the making of such reservations… They provide a service to the public for which they are compensated by their customers. This compensation is not subject to the lodging tax. [29]

Three cases reached a different conclusion. In Georgia , the State Supreme Court found that OTCs are not obligated to collect hotel occupancy taxes, but if they do, they must be applied to all amounts paid by a consumer for occupancy, including non-separately-stated OTC services. [30] A District of Columbia judge concluded that “[i]t is not the transaction between the hotel and the OTC that is the retail sale; rather, it is the subsequent sale to the ultimate purchaser…” [31]

A federal judge in the Western District of Texas (the same as above) chose to disregard a part of the statute in ruling against the OTCs:

The Cities assert that the words ‘to the hotel’ are mere surplusage, and the Court agrees. If a period were placed immediately after the phrase ‘consideration paid by the occupant of the room,’ the tax provision in the Dallastype ordinance would make perfect sense. Thus, there is every reason to disregard the words ‘to the hotel’ as surplusage because they are repugnant to the rest of the ordinance and would render the ordinances meaningless. [32]

This decision is at odds with the federal judge in the Eastern District of Texas and the Texas Court of Appeals, both of whom found that the statute’s requirement that only amounts paid “to the hotel” are taxable. [33]

Court Rulings on Cities’ Claim that Not Taxing OTC services Would Undermine the Hotel Occupancy Tax

Although more a public policy argument than a legal argument, some cities have argued that a court’s unwillingness to permit taxation of OTC services under the hotel occupancy tax would undermine that tax as a whole. In the Anaheim case, the hearing officer reached that conclusion, as discussed by the judge who reversed him on this point:

The Hearing Officer concluded that an interpretation of the ordinance that bases the transient occupancy tax on the amount charged by the hotel would lead to absurd results. The Hearing Officer considered the following hypothetical: “[]A hotel or hotel chain [could establish] a wholly owned subsidiary corporation in a different municipality to handle all its reservation and booking inquiries. The hotel could then provide rooms to the subsidiary at an extremely cheap price and the subsidiary could sell them to consumers at a much higher rate. In this way, the Company would be able to provide accommodations to customers without having to charge the customers the…tax on the amount the customers actually pay for the room. [34]

Similarly, the judge in the District of Columbia case upheld the law in part out of this worry, stating that government “is correct when it argues that under the OTC ‘s proposed interpretation, retail sales tax A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions . Many governments exempt goods like groceries; base broadening , such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding . could be avoided altogether by a hotel simply by interposing a shell company between its customers and the hotel.” [35]

This concern—the threat of hotel tax collections being disrupted unless OTC services are subject to the tax—arises only in the case of a poorly drafted hotel occupancy statute. If the statute is designed to tax amounts spent by the customer as part of transactions related to occupancy, then that is very broad and difficult to collect and enforce. Many different transactions are undertaken by travelers that are related to occupancy, such as online travel services, travel agents, personal assistants, conference booking coordinators, conference packages, transportation options, and so forth. If a jurisdiction wishes to tax all services under its sales tax, that is one thing, but there is no justification for subjecting only these services, or only OTC services, to the higher-rate hotel tax.

Further, not taxing OTC -hotel transactions does not threaten to undermine a city’s ability to collect hotel taxes on amounts paid by travelers to hotels for rooming charges. As the judge in the Anaheim case explained:

Despite the Hearing Officer’s concern, it is not necessary to skew the interpretation of the Anaheim ordinance in order to protect the City from the type of abuse suggested by the hypothetical. The hotel in the hypothetical is engaged in a collusive transaction with its subsidiary, charging ‘an extremely cheap price’ to the benefit of its subsidiary, not a price determined in an arms-length transaction. The abuse represented by the hypothetical is not that the hotel is marketing rooms through a third party, but that it is marketing rooms within its own corporate structure…. There is no evidence in the record that the prices charged by hotels to the OTCs are collusive prices. To the contrary, the Hearing Officer found that the prices charged by hotels to OTCs are set in negotiated transactions. [36]

In the recent Tennessee case the judge concluded that “shell companies” are unlikely because “OTCs and the hotels are independent entities that negotiate in arms-length transactions [where] the hotel has every incentive to keep the net rate as high as possible and to reserve for direct booking as many rooms as it believes it can sell directly to consumers, without sacrificing any potential revenue to the OTCs.” [37] The judge further emphasized that it is a legislative role, not a role of the courts, “to enact revenue statutes that clearly state the scope and application of the tax laws and, upon identifying any potential revenue shortfalls in their application, to address those perceived shortfalls by appropriate legislation.” [38] The legislature is the one, the judge wrote, who must fix a statute that has “simply failed to keep up with the times.” [39]

Federal Action Could Bar Discriminatory Taxation, Similar to Other Precedents Restraining State Damage to Interstate Commerce

In economics, the idea that individuals should pay taxes in proportion to the government services they use is known as the “benefit principle.” Since visitors use fewer services than residents, and never use the most expensive service (public schools), they should bear a smaller share of the tax burden. Taxes on restaurants, hotels, and car rentals can thus be considered a proxy for a tax on tourists (although there are tourists who stay with friends rather than in hotels, don’t eat out, and don’t rent cars). But the benefit derived from added economic activity from visitors and travelers probably exceeds the government services they use during their stay, undermining the basis for excessive hotel taxation.

Such taxes are often described as taxes on “them, not us.” But we are all “them” to someone else; the net result is everyone paying high hotel taxes everywhere. These taxes can be considerable: The Global Business Travel Association estimates that these taxes alone on travelers can range from $21.49 to $40.99 per day. [40] Hotel taxes nationwide average about 14 percent, much higher than sales taxes on other goods and services. [41]

There is no principled basis for only taxing those services provided by Internet businesses. If state and local officials believe that online travel companies should pay sales or excise tax based on the services they provide, the payment should only occur as part of a general taxation of all services. A non-neutral tax system would apply the same tax rate to all services, and the democratic process can settle on a rate that raises needed revenue while minimizing economic harm. By singling out only services provided by Internet-based travel companies, state and local governments are demonstrating that their true motivation is gouging revenue from out-of-staters, not fairness.

Potential federal action could be justified to maintain settled practices in hotel occupancy taxation: Hotel occupancy taxes would be calculated by the amounts hotels receive in payment from the hotel occupant. Further, states could retain the option of taxing online travel booking services, as long as they tax services generally or at least do not discriminate by only taxing online travel booking services.

Such a proposal woud be in line with other federal actions that prevent parochial state government actions from damaging interstate commerce. The people of the United States adopted the Constitution in large part because their existing national government had no power to stop states from imposing trade barriers with each other, to the detriment of the national economy. As U.S. Supreme Court Justice William Johnson wrote in the seminal case of Gibbons v. Ogden, invalidating New York’s stifling regulations on interstate water travel:

[States’ power over commerce,] guided by inexperience and jealousy, began to show itself in iniquitous laws and impolitic measures…, destructive to the harmony of the States, and fatal to their commercial interests abroad. This was the immediate cause, that led to the forming of a convention. [42]

Consequently, among the powers granted to Congress by the new Constitution was “[to] regulate Commerce… among the several States,” a provision known today as the Commerce Clause. [43] Congress thus has the power to restrain state laws that discriminate against or otherwise burden the flow of interstate commerce.

Congressional actions under the Commerce Clause to remove or prevent state and local burdens on the travel industry are common and have previously been upheld. [44]

City officials claim their motivations are not to burden interstate commerce, but rather to promote fairness and collect owed revenue from the “wholesale” service. In reality, existing tax laws are being contorted to extend to the online travel industry, taxing service transactions with no substantial nexus to the jurisdiction or to hotel occupancy.

The costs imposed in filing and defending these lawsuits are also passed along to taxpayers and travelers. These are magnified in places like California, which requires pre-payment of the disputed (and often enormous) tax amounts before a tax can be challenged in court. [45]

It may be too much to ask that states only tax everything once and only once, and not design taxes to hit only nonresidents. The siren call of revenue (sometimes sold as costless and risk-free [46] ) is often tempting enough to override principles and sound policy. The Commerce Clause exists precisely for these situations, when states put tax parochialism ahead of the common national good.

It is in the nation’s interest and the interest of each state and municipality to have a vibrant and dynamic travel industry. Unpredictable and unaccountable taxes are a hindrance to that, and perhaps only congressional action can move the states toward less harmful tax policy.

Aggressive and unjustified taxation of online travel companies is a cost, in that each community hopes to burden out-of-state travelers for its own benefit. Such a burden in one municipality is at best a bother. But when multiplied across the country, it can quickly become death by a thousand cuts.

If a state or local government wishes to tax nonresidents or services, that is acceptable. But if non-residents are taxed at a higher rate than residents, or if only services primarily used by nonresidents are taxed while everything else is exempt, the real motivation becomes clear: a “meddlesome, money-grabbing plan.” When cities and states act in such a way toward one set of businesses, investment and economic growth can be chilled as other businesses take note.

It is important that our state and local governments collect revenue needed to provide the services demanded by their constituents. But that need does not justify impositions on interstate commerce, burdens on the national economy, or the corruption of sound tax principles.

Appendix: Cases

This section contains information on all OTC hotel tax cases that have issued a decision on the merits.

Six cases from six states, where the OTCs prevailed or where litigation is ongoing, are not included as they have not involved decisions on the merits, either due to a failure by the government to exhaust administrative remedies ( Arkansas , California, Indiana , North Carolina , and Wisconsin ) or where the government lacked standing to bring the case ( New Jersey ). [47] Pending cases in six states are not included as they have not reached merits decisions ( Hawaii , Maryland , Michigan , Montana , Pennsylvania , Texas).

Federal Appellate Courts

U.S. Court of Appeals for the Fourth Circuit January 14, 2009 Pitt County, North Carolina v. Hotels.com, L.P. [48]

Decision: OTC services not subject to hotel tax. Unanimous decision of 3-judge panel, affirming decision of the U.S. District Court for the Eastern District of North Carolina.

Statute: “Operators of hotels, motels, tourist homes, tourist camps, and similar type businesses and persons who rent private residences and cottages to transients are considered retailers under this Article. A tax at the general rate of tax is levied on the gross receipts derived by these retailers from the rental of any rooms, lodgings, or accommodations furnished to transients for a consideration….” [49]

Analysis : “Online travel companies are not operators of the hotels whose rooms they offer to the public on the internet [citing Webster’s Dictionary definition of “operator”]… We therefore conclude that under the plain meaning of § 105.164.4(a)(3), an online travel company is not a retailer because it is not a business of a type that is similar to a hotel, motel or tourist home or camp. As a result, an online travel company is not subject to the Pitt County occupancy tax.” [50]

U.S. Court of Appeals for the Sixth Circuit December 22, 2009 Louisville/Jefferson County Metro Government v. Hotels.com, L.P. [51]

Decision: OTC services not subject to hotel tax. Unanimous decision, affirming decision of the U.S. District Court for the Western District of Kentucky.

Statute: A tax on “the rent for every occupancy of a suite, room or rooms, charged by all persons, companies, corporations, or other like or similar persons, groups or organizations doing business as motor courts, motels, hotels, inns or like or similar accommodation businesses.” [52]

Analysis : “The district court reasoned that OTCs are not like or similar to the listed types of businesses because they ‘have neither ownership, nor physical control, of the rooms they offer for rent.’ According to the counties, this reading impermissibly adds the terms ‘owner’ and ‘physical establishment’ to the ordinances. We are unpersuaded by this argument, however, because the notions of ownership and physical control over the rooms for rent are simply shared characteristics of motor courts, motels, hotels, and inns. The district court thus properly applied the principle of ejusdem generis to the ordinances in question…. Furthermore, unlike in [hypotheticals suggested by the counties, of hotels forming subsidiaries and escaping taxation], none of the OTCs here are under common ownership with the physical establishments that control the rooms.” [53]

Other Courts

Alabama (City of Birmingham) Alabama Circuit Court November 18, 2011 City of Birmingham v. Orbitz, Inc. [54]

Decision: OTC services not subject to hotel tax.

Statute: “There is levied and imposed, in addition to all other taxes of every kind now imposed by law, a privilege or license tax upon every person, firm or corporation engaging in the business of renting or furnishing any room or rooms, lodging or accommodations to transients in any hotel, motel, inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly furnished to transients for a consideration,” as calculated as a percentage “of the charge for such room, rooms, lodgings, or accommodations, including the charge for use or rental of personal property and services furnished in such room.” [55]

Analysis : “The plaintiffs object to the use of the word ‘facilitate’ in defining the defendant’s activities, but the undisputed facts show that that is what they do. They facilitate, or make easier, the making of such reservations…. The plain language of the statute and the plaintiffs’ ordinances compel the Court to the conclusion that the defendants in this case are not engaged in the business of renting or furnishing any room or rooms in any hotel…. These defendants are not hoteliers. They provide a service to the public for which they are compensated by their customers. This compensation is not subject to the lodging tax.” [56]

California (City of Santa Monica) Superior Court for Los Angeles County March 16, 2011 City of Santa Monica v. Expedia [57]

Statute: “[T]here is hereby imposed and levied on each and every transient a tax equivalent to fourteen percent (14%) of the total amount paid for room rental by or for any such transient to any hotel; which said tax shall be collected from such transient at the time and in the manner hereinafter provided…. [Room rental is t]he total charge made by any such hotel for lodging and/or lodging space furnished any such transient. [58]

Analysis : “If the ‘commission’ is a charge for some other service, and thus should be separately identified in the consumer’s bill, it is not subject to transient occupancy tax.” [59] “If a city decided to base a transient occupancy tax on the total amount paid by the transient for the hotel room (or for the hotel room and any ‘commission’ for the services of an intermediary) there seems to be no reason why such a tax scheme could not be drafted and considered. A new marketing methodology or other changed circumstances do not provide a basis for a court to rewrite a statute….” [60] “Santa Monica argues that excluding from taxation the amount paid to the OTC by the transient as an increment over and above the wholesale price of the room charged by the hotel operator lies outside the intent of the statute and deprives the Santa Monica ordinance of all serious purpose…. The fact that the Santa Monica ordinance does not tax the value of the service provided by the OTCs does not render the taxing scheme absurd. The fact that without the OTCs’ services the hotels might themselves pay for alternative marketing arrangements does not render the transactions between the OTCs and the hotels a ‘sham.'” [61]

California (City of Anaheim) Superior Court for Los Angeles County February 1, 2011 Expedia, Inc. v. City of Anaheim [62]

Statute: “For the privilege of occupancy of space in any hotel, each transient is subject to and shall pay a tax in the amount of fifteen percent of the rent.” [63] “‘Rent’ means the consideration charged by an operator for accommodations, including without limitation any (1) unrefunded advance rental deposits or (2) separate charges levied for items or services which are part of such accommodations including, but not limited to, furniture, fixtures, appliances, linens, towels, non-coin-operated safes, and maid service.” [64] “‘Operator’ means any person, corporation, entity, or partnership which is the proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, debtor in possession, licensee or any other capacity. Where the operator performs its functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator and shall have the same duties and liabilities as its principal.” [65]

Analysis : “OTCs do not control and run hotels…. “None of these facts comprise incidents of control of a hotel or give the OTCs the right to run the business of a hotel. The hotel controls the production of the product sold (the hotel room and accompanying amenities), the quantity of production, the quality of production, the channels of distribution of the product (i.e., whether and what quantity of rooms will be made available through a particular intermediary), and the pricing of the product (whether sold directly to the consumer or to an intermediary).” [66]

“At most the Hearing Officer’s findings would allow a conclusion that the OTCs are agents of the hotel for purposes of marketing a portion of the hotels’ production (such portion having been determined by each hotel). But a mere agency relationship is not enough for shifting or sharing tax responsibilities under the Anaheim ordinance. Rather, the ordinance imposes such responsibility only on managing agents, agents who have been delegated sufficient discretion to allow them to make corporate policy…” [67]

“The Hearing Officer considered the following hypothetical: ‘A hotel or hotel chain could establish a wholly owned subsidiary corporation in a different municipality to handle all its reservation and booking inquiries. The hotel could then provide rooms to the subsidiary at an extremely cheap price and the subsidiary could sell them to consumers at a much higher rate. In this way, the Company would be able to provide accommodations to customers without having to charge the customers the tax on the amount the customers actually pay for the room.’ Despite the Hearing Officer’s concern, it is not necessary to skew the interpretation of the Anaheim ordinance in order to protect the City from the type of abuse suggested by the hypothetical. The hotel in the hypothetical is engaged in a collusive transaction with its subsidiary, charging ‘an extremely cheap price’ to the benefit of its subsidiary, not a price determined in an arms-length transaction. The abuse represented by the hypothetical is not that the hotel is marketing rooms through a third party, but that it is marketing rooms within its own corporate structure…. There is no evidence in the record that the prices charged by hotels to the OTCs are collusive prices. To the contrary, the Hearing Officer found that the prices charged by hotels to OTCs are set in negotiated transactions.” [68]

Florida (Leon County) Circuit Court, 2nd Judicial Circuit, Leon County, Florida April 19, 2012 Leon County v. Expedia, Inc. [69]

State Statute: “It is declared the intent of the Legislature that every person who rents, leases, or lets for consideration any living quarters or accommodations in any hotel, apartment hotel, motel… for a term of 6 months or less is exercising a privilege which is subject to taxation under this section [unless otherwise exempt].” [70] The TDT “shall be due on the consideration paid for occupancy in the county . . . .” [71] The TDT “shall be charged by the person receiving the consideration for the lease or rental, and it shall be collected from the lessee, tenant, or customer at the time of payment of the consideration for such lease or rental.” [72]

Analysis : “[The statute says the tax] shall be collected from the lessee, tenant, or customer at the time of payment of consideration. And I don’t think you can get around that language, because when it goes on to the customer’s credit card, that’s the payment.” [73] “Arguing fairness, if property is going to be taken by the state, and that’s what a tax is, the tax statutes have to be strictly construed…” [74]

Florida (Orange County) Circuit Court, 9th Judicial Circuit, Orange County, Florida January 20, 2011 Orange County v. Expedia, Inc. [75]

State Statute: “It is declared the intent of the Legislature that every person who rents, leases, or lets for consideration any living quarters or accommodations in any hotel, apartment hotel, motel… for a term of 6 months or less is exercising a privilege which is subject to taxation under this section [unless otherwise exempt].” [76] The TDT “shall be due on the consideration paid for occupancy in the county….” [77] The TDT “shall be charged by the person receiving the consideration for the lease or rental, and it shall be collected from the lessee, tenant, or customer at the time of payment of the consideration for such lease or rental.” [78]

Analysis: “The difficulty arises not from the language chosen by the Legislature and the local authorities, which are reasonably plain when viewed in isolation, but from application of these laws to a type of internet business transaction which was undoubtedly not contemplated at the time the TDT was initially drafted and enacted, and has apparently never been amended to directly address these circumstances.” [79]

“The Defendants do not own, lease, operate or manage any hotels. They do not become involved in any of the myriad activities inherent in running a hotel business, from buying the property, to building or contracting the construction of the facilities, to staffing the various hotel operations or services, or to providing any hotel amenities. The individual hotels, not the online travel companies, register guests, establish check-in and check-out times and procedures, and set all the rules and procedures governing stays on that property…. Perhaps most importantly, the Defendants do not own or control the rooms for which they offer to obtain reservations. They do not rent a block of rooms in advance of booking, and then re-let those rooms to their customers; they are not obligated to make reservations for any minimum number of rooms; and there is no penalty if they do not assist in making a specific number of reservations.” [80]

“Clearly, a net amount of rent accepted by the hotels themselves is properly subject to tax. The remainder of the charges to the hotel customers, however, reasonably can be viewed as separate fees or profits made by the online travel companies in exchange for the services they provide in informing customers about hotel accommodations, or in sending customers to hotels…. The Court finds that the TDT was not crafted to include within it the income earned by the online travel agencies in the transactions at issue in this case…” [81]

Georgia (City of Atlanta) Supreme Court of Georgia May 16, 2011 City of Atlanta v. Hotels.com [82]

Decision: OTC services not subject to hotel tax. Unanimous

Statute: “There is levied and assessed and there shall be paid a tax of seven percent of the rent for every occupancy of a guestroom in a hotel in the city.” [83] Rent is defined as “the consideration received for occupancy valued in money…” [84] Further, “Every person occupying a guestroom in a hotel in this city is liable for the tax levied in this article.” [85]

Analysis : “Under the statute and ordinance the tax is on the consumer. The statute and ordinance do not tax any transaction between a non-occupant such as an OTC and the hotel. Thus, reading the ordinance in toto and in pari materia to the Enabling Statute, the amount that is taxable is the retail amount paid for occupancy by someone who will occupy the room. Since the consumer cannot obtain the right to occupy the room without paying the retail room rate charged by the OTC, it is the retail room rate that is the taxable amount or ‘rent’ under the City’s ordinance.” [86]

Georgia (City of Columbus) Supreme Court of Georgia June 15, 2009 Expedia, Inc. v. City of Columbus [87]

Decision: OTCs are not operators of hotels and are not obligated to collect taxes, but must remit any taxes they collect. 4-3 decision.

Statute: Imposes “an excise tax An excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda , gasoline , insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed by or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article.” [88] “Any tax levied… in this Code section is also imposed upon every…entity who is a hotel or motel guest and who receives a room…. The person or entity collecting the tax from the hotel or motel guest shall remit the tax to the governing authority imposing the tax….” [89]

Analysis : “Due to a lack of evidence regarding the amount of the facilitation fee, no one can discern which portion of the room rate is allegedly for Expedia’s facilitation fee. Since Expedia has chosen to represent the room rate to the public as the price a customer must pay to secure his right to occupy the room, the City has no choice, under a clear and unambiguous reading of its ordinance, but to tax the customer for the published room rate demanded by Expedia.” [90]

“As borne out by the facts of the case, Expedia, by virtue of its contracts with City hotels, elects of its own accord to collect hotel occupancy taxes. It may change its business practices at any time and any injunction should reflect this fact.” [91]

Dissent (Hunstein): “As the majority acknowledges, neither it nor the trial court has found Expedia to be an innkeeper or operator under the City’s ‘Hotel-Motel Occupancy Excise Tax’ ordinance. Accordingly, when Expedia sells to persons who ultimately occupy motel or hotel rooms in the City, Expedia does so not as an innkeeper but as a private party who, under the plain language of the ordinance, is not subject to the ordinance’s terms…. Expedia is not different from the tourist who, after renting a room, hands the keys over to a traveler in the parking lot in exchange for reimbursement and a fee. The City’s ordinance simply does not govern transactions between a non-innkeeper entity like Expedia and the users of the rooms, who occupy the rooms but do not pay the hotel and instead pay Expedia.” [92]

Dissent (Melton, Hunstein, Hines): “[T]he trial court granted equitable relief [an injunction] despite the fact that a motion for a declaratory judgment, an adequate remedy at law, was pending at the same time. By longstanding principles, the grant of equitable relief in this situation was improper.” [93]

Illinois (Village of Rosemont) U.S. District Court for the Northern District of Illinois, Eastern Division October 14, 2011 Village of Rosemont, Illinois v. Priceline.com, Inc. [94]

Decision: Transactions with OTCs are subject to tax, as they are not services but the rental of property by an “owner,” defined as “anyone who receives the ‘consideration for the rental.'”

Statute: A tax upon “the privilege of renting a hotel or motel room within the Village of Rosemont [at a rate of ] 7% of the room rental rate [excluding] taxes or other non-room rental charges added to the hotel bill.” [95] Paid by the rentor (customer who “seeks the privilege occupying the hotel or motel room,” but it is the duty of “the owner of every hotel or motel to secure the tax from the rentor…and to pay over to the Village Collector the tax.” [96] Owner is defined as any person (a) having “an ownership interest in [a hotel],” (b) “conducting the operation of a hotel,” or (c) “receiving the consideration for the rental of such hotel or motel room.” [97]

Analysis : “Because the customer cannot access the hotel room unless and until he pays the OTC ‘s entire charge, the OTCs are owners who receive ‘consideration for…rental[s],’ within the meaning of the ordinance.” [98]

“The term ‘owner’ is defined by the Ordinance to include anyone who receives the ‘consideration for the rental’… A classification for taxation purposes carries a strong presumption of validity, and it will survive a challenge on equal protection grounds unless the party asserting the challenge negates every conceivable basis for the classification.” [99]

Kentucky (City of Bowling Green) Court of Appeals of Kentucky April 29, 2011 City of Bowling Green v. Hotels.com [100]

Decision: OTC services not subject to hotel tax. Unanimous.

Statute: A tax on “the rent for every occupancy of a suite, room, or rooms, charged by all persons, companies, corporations, or other like or similar persons, groups, or organizations doing business as motor courts, motels, hotels, inns, or like or similar accommodations businesses.” [101]

Analysis : “In construing statutes, we must give them a literal interpretation unless they are ambiguous and if the words are not ambiguous, no statutory construction is required…. The OTCs do not provide physical accommodations within the City of Bowling Green…. [A provider of temporary corporate apartments is different from OTCs] because it had an actual physical presence within the county and was not merely a broker of the rooms.” [102]

Missouri (St. Louis County) Supreme Court of Missouri June 28, 2011 St. Louis County v. Prestige Travel, Inc. [103]

Decision: OTC services not subject to hotel tax. Unanimous en banc.

Statute: A tax on “the amount of sales or charges for all sleeping rooms paid by the transient guests of hotels and motels situated within St. Louis County, Missouri.” [104]

Analysis : “When read in context, it is clear the obligation to file the tax was placed solely on those ‘engaged in the business of operating a hotel or motel.’ This supports the finding that Prestige was not liable for the tax. Furthermore, because taxing statutes must be construed strictly, and taxes are not to be assessed unless they are expressly authorized by law, this Court will not read a tax obligation into the law where one was not clearly expressed.” [105]

New Mexico (City of Gallup) U.S. District Court for the District of New Mexico March 1, 2010 City of Gallup v. Hotels.com [106]

Statute: “There is hereby imposed an occupancy tax of revenues of five percent (5%) of gross taxable rent for lodging paid to vendors on and after August 1, 1998. Every vendor providing lodging shall collect the tax thereon on behalf of the city and shall act as a trustee therefor.” [107]

Analysis : “It would not make sense to interpret ‘gross taxable rent’ as the full amount charged by Defendants because only a portion of this amount is actually ‘paid to vendors’…. Plaintiffs have not established that Defendants collected taxes over and above what they have remitted to the vendors.” [108]

New York (City of New York) New York Supreme Court, Appellate Division, First Department November 29, 2011 Expedia, Inc. v. City of New York Department of Finance [109]

Decision: OTC services not subject to hotel tax. Unanimous 5-0.

Statute: Imposes on a hotel occupant a tax on the rent or charge per day for each hotel room. [110]

Analysis : “[T]he plain language of the enabling legislation did not clearly and unambiguously provide the City with broad taxation powers with respect to imposing a hotel occupancy tax. Rather, it permitted the City to impose the tax on ‘hotel occupants.’ Given the well-established rule that a statute that levies a tax ‘must be narrowly construed’ and ‘any doubts concerning its scope and application are to be resolved in favor of the taxpayer,’ the plain meaning of this phrase did not encompass the service fees charged by the travel intermediaries and the legislation may not be extended so as to permit the imposition of the tax in a situation not embraced by it.” [111]

Ohio (City of Findlay) U.S. District Court for the Northern District of Ohio June 26, 2006 City of Findlay v. Hotels.com, L.P. [112]

Decision: OTC services not subject to hotel tax. To the extent OTCs collected what they indicated to consumers were taxes, they are obligated to remit them to the City.

Statute: “The transient guest tax…shall be paid by the transient guest to the vendor, and each vendor shall collect from the transient guest the full and exact amount of the tax payable on each taxable lodging. The tax required to be collected under this chapter shall be deemed to be held in trust by the vendor until paid to the [City].” [113] /sup>

Analysis : “The plain definition of ‘vendor’ in the City’s ordinance is too narrow to reach Defendants, who are not alleged to own or operate any hotels…. [E]ven if the exception clause in the City’s definition section created an ambiguity regarding whether Defendants are ‘vendors,’ the Ohio Supreme Court maintains that when it finds statutes defining subjects of taxation to be ambiguous, it resolves the ambiguity in favor of the taxpayer.” [114]

Ohio (City of Columbus) U.S. District Court for the Northern District of Ohio October 14, 2009 City of Columbus v. Hotels.com, L.P. [114]

Decision: Court rejected City’s claim that OTCs are engaged in criminal or fraudulent activity.

Analysis :”[N]othing has been presented which would justify a finding that its conduct in attempting to influence legislation and related activities could be classified as fraudulent or criminal.” [116]

Oklahoma District Court of Oklahoma County March 11, 2011 State v. Priceline, Inc. [117]

Statute: Tax on the gross receipts of each sale of “[s]ervice of furnishing rooms by hotel, apartment hotel, public rooming house, motel, public lodging house, or tourist camp.” [118]

Analysis : The Court granted the OTCs’ motion to dismiss the case after considering the briefs.

Pennsylvania (County of Lawrence) Commonwealth Court of Pennsylvania August 3, 2011 County of Lawrence, Pennsylvania v. Hotels.com, L.P. [119]

Decision: Trial to proceed on the question of whether “the Companies take title to the hotel rooms before renting them out to patrons,” and if so, whether the statute is applicable to the companies. Other claims by County dismissed.

Statute: County commissioners authorized to “impose an excise tax on the consideration received by each operator of a hotel, as defined by this section, from each transaction of renting a room or rooms to accommodate transients. If levied the tax shall be collected by the operator from the patron of the room and paid over to the county.” [120] An operator is a person or persons “who maintain, operate, manage, own, have custody of or otherwise possess the right to rent or lease overnight accommodations in a hotel to the public for consideration.” [121]

Analysis : “We note that the County has alleged that the Companies take title to the hotel rooms at issue before renting them out to patrons…. We note that these allegations are strenuously contested by the Companies, but if they are proven, it would present common pleas with a viable question whether these activities are sufficient to make the Companies hotel ‘operators’ within the meaning of the ordinance. We express no opinion on this at this premature stage…” [122]

Note: The Court was reviewing an order from a trial judge who dismissed the case but passed away before issuing a written opinion. The Court notes that his transcripted remarks suggested a finding of fact against the County, but further proceedings are needed to produce a written opinion. The trial judge, addressing his remarks to the County, had said: “I think they’re [the Companies] right on the exhaustion. I think they’re right on the ordinance itself. I think you jumped the gun. Go to the legislature and get what you need from them, they write the statute and go to the county and get the ordinance. You’re trying to pull yourselves up by your own bootstraps. And it isn’t going to work.” [123]

Pennsylvania (City of Philadelphia) Commonwealth Court of Pennsylvania February 2, 2012 City of Philadelphia v. City of Philadelphia Tax Review Board [124]

Statute: Operator collects tax from a hotel patron; operator is “a person or entity that maintains, operates, manages, owns, has custody of, or otherwise possesses the right to rent or lease overnight accommodations in any hotel to the public for consideration.” [125]

Analysis : “[T]he booking of a reservation through Expedia does not provide a customer with the use or possession of a room or the right to the same. Rather, this booking merely establishes the expectation that a room will be available to a customer at a set point in time in the future. Additionally, as Expedia notes, hotels typically permit cancellations and changes in itineraries, and it would be illogical to assess a tax on a future event which may never occur. In the end, the record supports the Board’s determination that ‘[i]t is not until an individual has registered at a hotel facility and has obtained and paid for a room, that the actual rental has occurred…'” [126]

Note: A prior court decision in this case included a 2005 admonishment of the City’s failure to follow administrative procedures. “This court is troubled by the fact that it does not appear that the City has ever performed an audit A tax audit is when the Internal Revenue Service ( IRS ) conducts a formal investigation of financial information to verify an individual or corporation has accurately reported and paid their taxes. Selection can be at random, or due to unusual deductions or income reported on a tax return. , provided notice or attempted to collect the Tax from Defendants, other than by filing the instant lawsuit. It is the function of the court system to resolve legal disputes; its role is not to levy or collect taxes (absent an appeal).” [127]

South Carolina Supreme Court of South Carolina January 18, 2011 Travelscape, LLC v. South Carolina Department of Revenue [128]

Decision: OTC services are subject to hotel tax, as OTC is “engaged… in the business of furnishing accommodations.” The tax raises no constitutional concerns because no two states can tax the same OTC transaction. 4-1 decision with written dissent.

Statute: A tax on “the gross proceeds derived from the rental or charges for any rooms…furnished to transients by any…place in which rooms, lodgings, or sleeping accommodations are furnished to transients for consideration.” [129] “Gross proceeds of sale” is defined as “the value proceeding or accruing from the sale, lease, or rental of tangible personal property…without any deduction for…the cost of materials, labor, or service.” [130] The tax is imposed “on every person engaged or continuing within this State in the business of furnishing accommodations to transients for consideration.” [131]

Analysis : “In our view, the fees charged by Travelscape for its services are subject to sales tax under the plain language of section 12-36-920(A) as gross proceeds…. [Gross proceeds] includes the value obtained from the rental of accommodations without deduction for the cost of services.” [132]

“Travelscape’s argument ignores the antecedent language in (E) that it applies to all persons ‘engaged… in the business of furnishing accommodations.’… Accordingly, we find the context of ‘furnish’ as it appears in subsection (E) demonstrates that it encompasses the activities of entities such as Travelscape who, whether directly or indirectly, provide hotel reservations to transients for consideration.” [133]

Dissent : “The question before us is whether the legislature intended the statutory seven percent sales tax to reach the separate fee charged by Travelscape for the service it provides. I do not believe the statute unambiguously answers this question.… As the majority acknowledges, the word ‘furnished’ as used in subsection (A) connotes physically providing accommodations to customers, which Travelscape does not do. Thus, in order to find Travelscape to be in the business of ‘furnishing accommodations,’ the majority imposes a different meaning of the word ‘furnish’ in subsection (E)…. In my opinion, giving the term ‘furnish’ a different meaning in subsection (A) than is given in subsection (E), is in contravention to the rule of statutory construction that the same terms or words in a statute should be given the same meaning.” [134]

Tennessee (City of Goodlettesville) U.S. District Court for the Middle District of Tennessee February 21, 2012 City of Goodlettesville v. Priceline, Inc. [135]

Statute: A tax “upon the privilege of occupancy in any hotel of each transient in an amount equal to three percent (3%) of the consideration charged by the operator.” [136]

Analysis : “Contrary to the allegations set forth in the Complaint, the evidence demonstrates that OTCs do not purchase or take title to hotel rooms and do not pay the hotels before a booking is made. Instead, the evidence shows that OTCs contract for the right to market an allotment of rooms, in return for the hotel’s promise to reimburse the OTCs at the negotiated net rate for any rooms sold, with no payments made until after a booking occurs and with no penalty for unsold rooms.[…]

“Although the City is correct that, under Tennessee law, the court should not adopt a statutory interpretation that renders a revenue statute a “virtual nullity,” the court’s interpretation here has no such effect. Under the existing statutory framework, the City and the other class members have collected and will continue to collect substantial occupancy tax revenues on the consideration local hotels receive at the net rate. Furthermore, as several courts have found, it is not “absurd” for localities to collect tax revenue on the net rate.[…]

“Moreover, the OTCs and the hotels are independent entities that negotiate in arms-length transactions. In those transactions, the hotel has every incentive to keep the net rate as high as possible and to reserve for direct booking as many rooms as it believes it can sell directly to consumers, without sacrificing any potential revenue to the OTCs.” [137]

Texas (City of Houston) Texas Court of Appeals (Houston, 14th Dist.) October 15, 2011 City of Houston v. Hotels.com [138]

Statute: “There is hereby levied within the corporate limits of the city a tax upon the cost of occupancy of any room furnished by any hotel where such cost of occupancy is at the rate of $2.00 or more per day, such tax to be equal to seven percent of the consideration paid by the occupant of such room to such hotel.” [139]

Analysis : “This is a reasonable reading of the ordinance, as can be seen by comparing the products or services of hotels and OTCs to the defined term occupancy. Simply stated, a hotel has rooms and the concomitant right to use or possess those rooms; to express this right in the terms defined in the resolution, a hotel has occupancy. The hotel offers occupancy in exchange for payment of the invoiced discounted rate. An OTC, on the other hand, does not have rooms or occupancy; as Houston concedes, the OTCs do not have the right to use or possess hotel rooms. Instead, the OTCs have websites and provide information. The content of a given OTC ‘s website includes material provided by the hotel, which may include photographs, descriptions, and listings of the amenities and services available onsite—but the OTC also provides information about the hotel’s competitors. Visitors to the website can access maps, check room availability, and compare rates, ratings, and the reviews of other consumers. In many instances, visitors to an OTC ‘s website have the additional opportunity to combine the OTC ‘s services in booking a hotel room with its similar services in arranging cruises, flights, and ground transportation. In sum, the OTC does not merely help the website visitor make a reservation; it also helps consumers make informed choices in spending their travel dollars, and to do so conveniently and efficiently. When the consumer pays the OTC, the payment includes compensation for these benefits.” [140]

“If Houston’s interpretation of the ordinance is also reasonable, then the ordinance is ambiguous and the trial court could have properly granted summary judgment on the ground that the ordinance is ambiguous and therefore must be strictly construed against Houston and in the OTC ‘s favor.” [141]

Texas (City of Orange) U.S. District Court for the Eastern District of Texas September 21, 2007 City of Orange v. Hotels.com [142]

State Statute: Municipalities are authorized to impose “a tax on a person who, under a lease, concession, permit, right of access, license, contract, or agreement, pays for the use or possession or for the right to the use or possession of a room that is in a hotel, costs $2 or more each day, and is ordinarily used for sleeping…” [143]

City Statute: “[A] tax upon the occupancy of any room or space furnished by any hotel or motel…paid by the occupancy of such room or space to such hotel or motel…” [144]

Analysis : “Plaintiff does not, and of course, cannot allege that Defendants are ‘hotels’ or ‘motels.’ Plaintiff admits that it properly receives the 7% tax based on the negotiated room rate that is actually paid to the hotels…. The Ordinance clearly states that the tax is imposed only on the amount received by the hotel in consideration for occupancy of the room.” [145]

Texas (City of San Antonio) U.S. District Court for the Western District of Texas July 1, 2011 City of San Antonio v. Hotels.com [146]

Decision: OTCs “control” hotels in that they step into the shoes of the hotel for the purpose of tax collection. Tax is imposed on consumer for amounts paid to secure hotel accommodation, and statutory reference of “to the hotel” should be disregarded.

Statute: Case is a class action involving 173 Texas cities. The statutes are very similar to the other Texas statutes listed above.

Analysis : “[T]he only contract or agreement at the time hotel occupancy tax is being assessed and collected is between the OTC and the consumer…. There is no contract between the consumer and the hotel until some later date when the occupant actually checks into the hotel.” [147] “The OTCs have sole control over the decision to establish, change, or dissolve markups, services fees and/or surcharges as they wish.” [148] “[The margin kept by OTCs] is clearly part of the retail cost that the consumer must pay for the right to occupancy.” [149]

“The OTCs concede that they currently make enough revenue through their markup and service fee to charge taxes on the margin and still make a considerable profit.” [150]

“The Cities assert that the words ‘to the hotel’ are mere surplusage, and the Court agrees. If a period were placed immediately after the phrase ‘consideration paid by the occupant of the room,’ the tax provision in the Dallas-type ordinance would make perfect sense. Thus, there is every reason to disregard the words ‘to the hotel’ as surplusage because they are repugnant to the rest of the ordinance and would render the ordinances meaningless.” [151]

“Based on the jury’s finding that Defendants are ‘controlling’ hotels, and the Court’s findings and conclusions herein, the Court finds that the OTC ‘s have a legal duty to collect and remit hotel occupancy taxes imposed under the Cities’ ordinances.” [152]

Wisconsin (City of Madison) Dane County Circuit Court October 12, 2011 City of Madison v. Expedia, Inc. [153]

District of Columbia (City of Washington) Superior Court of the District of Columbia October 12, 2011 District of Columbia v. Expedia, Inc. [154]

Decision: OTCservice is taxable because statute’s purpose is to tax any payments made by ultimate purchaser, including for any services as part of the sale.

Statute: Tax imposed on “the gross receipts from the sale of or charges for any room or rooms, lodgings, or accommodations furnished to a transient by any hotel…or other place in which rooms, lodgings, or accommodations are regularly furnished to transients.” [155] Gross receipts are defined as “the total amount of the sales prices of the retail sales.” [156]

Analysis : “Both interpretations are reasonable. Both the Defendant and the District read the statute in the manner a well-informed person might. Because the plain meaning of the statute is open to two reasonable, yet opposing, interpretations, it is necessary under Acme to turn to other tools of reasonable statutory interpretation in order to discern the purpose of the statute and avoid absurd results.” [157]

“It is not the transaction between the hotel and the OTC that is the retail sale; rather, it is the subsequent sale to the ultimate purchaser…. The statute is designed to ensure taxation applies to the entirety of the services being taxed…. The District of Columbia is correct when it argues that under the OTCs’ proposed interpretation, retail sales tax could be avoided altogether by a hotel simply by interposing a shell company between its customers and the hotel.” [158]

New Law: In April 2011, the District of Columbia enacted a new law explicitly imposing hotel tax on “the net sale or net charges received from the transient by the room remarketer,” defining net sale and net charges as “the gross receipts from the sale of or charges for any room or accommodations received by a retailer from a room remarketer.” [159] Thus, confusingly, the taxable amount is the “net” amount paid to an OTC, defined in turn as the “gross” amount received by the hotel. As the judge in this case noted, “[l]ooking at the two statutory provisions together, it is impossible to reconcile any meaning out of the confusion.” [160] However, the judge nevertheless upheld the tax on OTCs: “Despite its unnecessarily ambiguous plain language, the court holds that the amended sales tax statute would apply to the OTCs transactions with transients prospectively.” [161]

[Back] OTCs are sometimes referred to as third-party intermediaries (TPIs), accommodations intermediaries, travel intermediaries, or travel booking facilitators.
[Back] States that impose sales tax on services generally are Hawaii, New Mexico, and South Dakota .
[Back] See Billy Hamilton, Shirt Tales and Online Travel Companies , 54 State Tax Notes 661, 664 (2009).
[Back] Judy DeHaven, Lyndhurst is suing travel websites for its local hotel tax , New Jersey Star-Ledger, Jun. 25, 2008. See also Jon Ralston, Weighing the pros and cons of Clark County suing Web sites for room tax revenue , Las Vegas Sun, Aug. 2, 2009 (“The issue, which has been percolating for years, is starting to bubble up again on Grand Central Parkway as county commissioners may soon be asked to sue Internet travel sites to recoup room tax revenue lost because of a differential between what Expedia & Co. pay for blocks of rooms and what they sell them for to customers. That is, the companies buy blocks of rooms for $100 each, sell them for, say $150, and pay the room tax only on the $100.”).
[Back] Hamilton, at 661.
[Back] District of Columbia v. Expedia , No. 2011-CA-002117-B at *20 (D.C. Sup. Ct. Oct. 12, 2011).
[Back] See, e.g., Hassett v. Welch , 303 U.S. 303, 314 (1938) (“[I]f doubt exists as to the construction of a taxing statute, the doubt should be resolved in favor of the taxpayer . . . .”); Bowers v. New York & Albany Lighterage Co. , 273 U.S. 346, 350 (1927) (“The provision is part of a taxing statute; and such laws are to be interpreted liberally in favor of the taxpayers”); Leavell v. Blades , 141 S.W. 893, 894 (Mo. 1911) (“When the tax gatherer puts his finger on the citizen, he must also put his finger on the law permitting it”); United States v. Merriam , 263 U.S. 179, 188 (1923) (“If the words are doubtful, the doubt must be resolved against the Government and in favor of the taxpayer”). For complete list of federal and state cases holding this rule, please see Tax Foundation, How Is the Money Used? Federal and State Cases Distinguishing Taxes and Fees (forthcoming 2012).
[Back] Duluth vs. Expedia: Suing for Sales Tax , Economist, May 21, 2011.
[Back] Todd Bice quoted in Scott Wyland, County won’t sue online firms to get room taxes , Las Vegas Review-Journal, Nov. 18, 2009.
[Back] See, e.g., Dan Bucks, Guest opinion: Online travel firms should pay state taxes like Montana businesses do , Billings Gazette, Nov. 19, 2010, http://billingsgazette.com/news/opinion/guest/article_6d615934-19a0-5ad2-943b-46118d8e3056.html (“We believe that Travelocity, Priceline, Orbitz and Expedia have been collecting this tax from Montana visitors, but keeping a part of it for themselves and shortchanging us.”).
[Back] Weissman, supra note 2.
[Back] Twelve supporting cases: Pitt County, N.C. v. Hotels.com, L.P. , 553 F.3d 148 (4th Cir. 2009); Louisville/Jefferson County Metro Government v. Hotels.com, L.P. , 590 F.3d 381 (6th Cir. 2009); City of Birmingham v. Orbitz, Inc. , No. CV 09-3607 (Ala Cir. Ct. Nov. 18, 2011); Expedia, Inc. v. City of Anaheim , No. JCCP 4472 (Sup. Ct. Los Angeles Co. Feb. 1, 2010); Orange County v. Expedia, Inc. , No. 48-2006-CA-2104-O (Cir. Ct. Orange County, Florida Jan. 20, 2011); Expedia, Inc. v. City of Columbus , 681 S.E.2d 122 (Ga. 2009); St. Louis County v. Prestige Travel, Inc. , No. SC 91228 (Mo. Jun. 28, 2011); City of Findlay v. Hotels.com, L.P. , 441 F. Supp.2d 855 (N.D. Ohio 2006); City of Philadelphia v. City of Philadelphia Tax Review Board , No. 216 CD 2011 (Pa. Cmwlth. Feb. 2, 2012); City of Goodlettesville v. Priceline.com, Inc. , No. 3:05-cv-00561 (M.D. Tenn. Feb. 21, 2012); City of Houston v. Hotels.com , No. 14-10-00349-CV (Tex. Ct. App. Oct 25, 2011); City of Orange v. Hotels.com , 2007 WL 2787985 (E.D. Tex. Sep. 21, 2007).
[Back] City of Anaheim , at 14-15 (internal quotations omitted).
[Back] City of Anaheim , at 23.
[Back] Id. at 18-19.
[Back] Pitt County , 553 F.3d at 313-14.
[Back] Louisville/Jefferson County Metro Government , 590 F.3d at 388-89.
[Back] City of Bowling Green , at *2.
[Back] City of Gallup , at part III.
[Back] City of Houston , at IV.A.
[Back] Id. at 34.
[Back] Id. at 39-40 (Pleicones, J., dissenting).
[Back] Village of Rosemont , at 4-5.
[Back] Op. at ¶ 80.
[Back] See City of Birmingham v. Orbitz, Inc. , No. CV-09 3607 JSV (Ala. Cir. Ct. Nov. 18, 2011) (finding compensation for facilitation services not encompassed by tax); City of Santa Monica v. Expedia , No. SC108568 (Cal. Sup. Ct. Los Angeles Mar. 16, 2011) (finding OTC commission not subject to hotel tax); Orange County v. Expedia, Inc. , No. 48-2006-CA-2104-O (Jan. 20, 2011) (finding that tax ordinance does not include OTC services); St. Louis County v. Prestige Travel, Inc. , No. SC 91228 (Mo. Jun. 28, 2011) (finding no OTC tax obligation in the statute); City of Gallup v. Hotels.com , No. CV 07-644 JC/RLP (D.N.M. Mar. 1, 2010) (finding that gross taxable rent in the statute refers to the amount received by the hotel); City of Philadelphia v. City of Philadelphia Tax Review Board , Mar. Term 2010 No. 00764 (Phila. C.P. Jan. 14, 2011) (finding the transaction occurs when the consumer obtained the right to use and occupy the room, not when the reservation was made); City of Houston v. Hotels.com , No. 14-10-00349-CV (Tex. Ct. App. Oct. 25, 2011) (finding that a consumer’s payment to the OTC is distinct from hotel occupancy); City of Orange v. Hotels.com , 2007 WL 2787985 (E.D. Tex. Sep. 21, 2007) (finding the statute only covers amounts received by the hotel). But see Expedia, Inc. v. City of Columbus , 681 S.E.2d 122 (Ga. 2009) (finding that tax is amount paid by consumer, including to OTC, if OTC chooses to collect it); City of San Antonio v. Hotels.com , No. 5:06-cv-00381 (W.D. Tex. Jul. 1, 2011) (finding that statute’s language limiting tax to amounts paid “to hotel” is “surplusage”); District of Columbia v. Expedia, Inc. , No. 2011-CA-002117-B (D.C. Sup. Ct. Oct. 12, 2011) (finding tax encompasses any payments made by ultimate purchaser).
[Back] City of New York Department of Finance .
[Back] St. Louis County , at 6.
[Back] City of Birmingham .
[Back] Id. at 129.
[Back] Id. at 14-16.
[Back] Op. at ¶ 155.
[Back] City of Houston , at IV.A; City of Orange , 2007 WL 2787985 at *6 (E.D. Tex. Sep. 21, 2007).
[Back] City of Anaheim , at 25.
[Back] District of Columbia , at 14-16.
[Back] Id. at 24-25.
[Back] City of Goodlettesville v. Priceline.com, Inc. , No. 3:05-cv-00561 (M.D. Tenn. Feb. 21, 2012), at *29.
[Back] Id. at *28.
[Back] Id. (internal citations omitted).
[Back] Global Business Travel Association, Lodging, Rental Car, and Meal Taxes on Travelers in the Top 50 U.S. Cities , Aug. 2009, http://www2.gbta.org/foundation/resourcelibrary/Pages/sept09article2.aspx.
[Back] Roger Yu, Taxes on hotel rooms are rising , USA Today, Apr. 5, 2010, http://www.usatoday.com/money/industries/travel/2010-04-05-1Ahoteltax05_ST_N.htm.
[Back] Gibbons v. Ogden , 22 U.S. 1, 224 (1824) (Johnson, J., concurring).
[Back] U.S. Const. art. I, sec. 8, cl. 3.
[Back] See Heart of Atlanta Motel, Inc. v. United States , 379 U.S. 241 (1964) (upholding congressional action prohibiting state and local statutes that interfered with use of hotels by interstate travelers); Katzenbach v. McClung, 379 U.S. 294 (1964) (same with restaurants used by interstate travelers); the Internet Tax Freedom Act, P.L. No. 105-277 (prohibiting state and local taxation of Internet access); 49 U.S.C. section 40116 (prohibiting state and local taxation of the sale of air transportation); 49 U.S.C. section 14505 (prohibiting state and local taxation of the sale of motor carrier transportation).
[Back] See, e.g., Expedia, Inc. v. City and County of San Francisco, No. JCCP 4472 (Sup. Ct. Los Angeles June 19, 2009).
[Back] In several instances, private contingency-fee lawyers have sought to be hired by a city to sue the online travel companies on the city’s behalf with no up-front cost, with the agreement that they get a cut of any amounts collected. The city’s oversight is often lax, resulting in abuses when private sector individuals are given governmental authority to pursue the collection of disputed taxes. A similar program at the federal level has been canceled due to rampant abuse. The Tax Foundation filed a friend-of-the-court brief opposing giving tax collection powers to private contingency-fee lawyers in a case currently on appeal to the California Supreme Court. See Joseph Henchman and Justin Burrows, The Dangers of Privatizing Tax Collection: Priceline.com, Inc. v. City of Anaheim , June 25, 2009, http://www.taxfoundation.org/legacy/show/25286.html.
[Back] Failure to exhaust administrative remedies: See City of Fayetteville v. Hotels.com, L.P. , No. CV 07-567-01 (Ark. Cir. Ct. Washington County Jul. 25, 2008); City of Oakland, California v. Hotels.com, LP , No. 07-17258 (9th Cir. Jul. 16, 2009); Lake County Convention and Visitors Bureau v. Hotels.com, L.P. , No. 2:06-cv-00207-JVBAPR (N.D. Ind. Mar. 30, 2010); Wake County, et al. v. Hotels.com, LP , No. 06-CVS-16256 (N.C. Gen. Ct. Nov. 19, 2007) (case ongoing); City of Madison v. Expedia, Inc. , No. 2007-cv-004488 (Wis. Dane County Cir. Ct. Jul. 24, 2008). Improper standing: Lyndhurst, N.J., Township v. Priceline.com, Inc. , 657 F.3d 148 (3d Cir. 2011).
[Back] 553 F.3d 308 (4th Cir. 2009).
[Back] N.C. Gen. Stat. § 105.164.4(a)(3).
[Back] 590 F.3d 381 (6th Cir. 2009).
[Back] Ky. Rev. Stat. § 91A.390(1).
[Back] No. CV 09-3607 JSV (Ala. Cir. Ct. Nov. 18, 2011), aff’d , No. 1100874 (Ala. Apr. 13, 2012).
[Back] Ala. Code § 40-26-1 et seq.
[Back] No. SC108568.
[Back] Santa Monica Mun. Code § 6.68.020; Santa Monica Mun. Code § 6.68.010(d).
[Back] City of Santa Monica , at 8.
[Back] Id. at 10.
[Back] Id. at 12-13.
[Back] No. JCCP 4472 (Feb. 1, 2010).
[Back] Anaheim Mun. Code § 2.12.010.
[Back] Anaheim Mun. Code § 2.12.005.080.
[Back] Anaheim Mun. Code § 2.12.005.050.
[Back] Id. at 20.
[Back] No. 2009-CA-4319 (Apr. 19, 2012).
[Back] F.S. 125.0104.
[Back] F.S. 125.0104(2)(a).
[Back] F.S. 125.0104(f).
[Back] Leon County , at 6.
[Back] Leon County , at 8.
[Back] No. 48-2006-CA-2104-O (Jan. 20, 2011).
[Back] F.S. 125.0104. See also Orange County Ordinances 25-136 et seq. (identical language).
[Back] F.S. 125.0104(f). See also Orange County Ordinances 25-137(a) (identical language).
[Back] Orange County , at 14.
[Back] Id. at 20-22.
[Back] No. S11A0508; S11X0509; S11A0510; S11X0512 (Ga. May 16, 2011).
[Back] Atlanta Ordinance § 146-79.
[Back] Atlanta Ordinance § 146-77.
[Back] Atlanta Ordinance § 146-80.
[Back] City of Atlanta , at 5.
[Back] 681 S.E.2d 122 (Ga. 2009).
[Back] Columbus Ordinance § 19-111.
[Back] Ga. Code § 48-13-51(a)(1)(B)(ii).
[Back] City of Columbus , 681 S.E.2d at 128.
[Back] Id. at 129 (Hunstein, P.J., dissenting).
[Back] Id. at 130 (Melton, J., dissenting).
[Back] No. 09-C-4438 (E.D. Ill. Oct. 14, 2011).
[Back] Rosemont Ordinance § 10-23(a).
[Back] Rosemont Ordinance § 10-23(b)-(c).
[Back] Rosemont Ordinance § 10-22.
[Back] Id. at 17-18.
[Back] — S.W.3d —-, 2011 WL 1600505 (Ky. App. Apr. 29, 2011).
[Back] Ky, Rev. Stat. 91A390(1).
[Back] No. SC 91228 (Mo. Jun. 28, 2011).
[Back] St. Louis County Rev. Ordinances § 502.500.
[Back] No. CV 07-644 JC/RLP (D.N.M. Mar. 1, 2010).
[Back] Gallup Ordinance § 3-2C-4; Gallup Ordinance § 3-2C-7(A).
[Back] No. 6174 650761/09 (N.Y. Ct. App. Nov. 29, 2011).
[Back] See Uncons Laws of NY ch 288-C, § 1.
[Back] 441 F.Supp.2d 855 (N.D. Ohio 2006).
[Back] Findlay Ord. § 195.06.
[Back] City of Findlay , 441 F.Supp.2d at 859-60.
[Back] Case No. 3:07cv2117 (N.D. Ohio Oct. 14, 2009).
[Back] No. CJ-2010-8952 (Mar. 22, 2011).
[Back] Okla. Stat. § 68-1354(A)(6) .
[Back] No. 2541 (Pa. Cmwlth. Ct. Jun. 6, 2011).
[Back] 16 P.S. § 1770.6(a). See also Lawrence County Ordinance No. 317 (identical language).
[Back] 16 P.S. § 1770.6(f). See also Lawrence County Ordinance No. 317 (identical language).
[Back] County of Lawrence , at 8.
[Back] Id. at 3, citing Reproduced Record at 1180-81.
[Back] No. 216 CD 2011 (Pa. Cmwlth. Feb. 2, 2012), aff’g Mar. Term 2010 No. 00764 (Phila. C.P. Jan. 14, 2011).
[Back] Phila. Code § 19-2401.
[Back] No. 216 CD 2011 (Pa. Cmwlth. Feb. 2, 2012).
[Back] City of Philadelphia v. Hotels.com , No. 0106023, 122014 (Phila. C.P. May 25, 2006) at 3.
[Back] 705 S.E.2d 28 (S.C. 2011).
[Back] S.C. Code § 12-36-920(A).
[Back] S.C. Code § 12-36-90(1)(b)(ii).
[Back] S.C. Code § 12-36-920(E).
[Back] Travelscape , 705 S.E.2d at 33.
[Back] No. 3:05-cv-00561 (M.D. Tenn. Feb. 21, 2012).
[Back] Goodlettesville City Code § 5-502.
[Back] City of Goodlettesville , at *16.
[Back] No. 14-10-00349-CV (Tex. Ct. App. Oct. 25, 2011).
[Back] Houston, Tex. Code of Ordinances § 44-102.
[Back] 2007 WL 2787985 (E.D. Tex. Sep. 21, 2007).
[Back] Tex. Tax Code § 351.002.
[Back] Orange, Tex., Code of City Ordinances § 1.604 (2006).
[Back] City of Orange , 2007 WL 2787985 at *6 (E.D. Tex. Sep. 21, 2007).
[Back] No. 5:06-cv-00381 (W.D. Tex. Jul. 1, 2011).
[Back] Op. at ¶ 51-52.
[Back] Op. at ¶ 108.
[Back] Op. at ¶ 118-120.
[Back] Op. at ¶ 206.
[Back] No. 2007-cv-004488 (Dane Co. Cir. Ct. Jul. 24, 2008) (case dismissed).
[Back] No. 2011-CA-002117-B (Oct. 12, 2011).
[Back] D.C. Code § 47-2002 (repealed 2011).
[Back] D.C. Code § 47-2001(h) (repealed 2011).
[Back] District of Columbia , at 10.
[Back] D.C. Code § 47-2001 et seq.
[Back] District of Columbia , at 20.
[Back] Id. at 21.

Content Search

Eu and un transfer special oxygen equipment for treating covid-19 to medical facilities in luhansk oblast.

Equipment will help provide oxygen therapy to people with respiratory disorders typical of coronavirus infection.

Severodonetsk, Luhansk Oblast, August 28, 2020 – The United Nations Development Program (UNDP) in Ukraine has transferred 50 specialized oxygen concentrators worth U.S. $25,000 to 23 medical facilities in Luhansk Oblast.

The oxygen concentrators (with output rates of 5 litres per minute) are special devices that separate oxygen from air and supply high concentrations of oxygen (more than 90 percent) – vital in oxygen therapy for people with the kind of respiratory disorders that are especially typical for coronavirus infection.

The coordinator of the Local Governance and Decentralisation Reform Component of the UN Recovery and Peacebuilding Programme, Olena Ruditch, noted that with the rapid spread of COVID-19, the need for essential medical devices and equipment is also growing.

“People with lung disease and patients with COVID-19 can suffer from mild to very severe symptoms,” Ms. Ruditch said. “Oxygen concentrators are extremely useful, because they deliver pure oxygen and help stabilize the patient's health. We’re striving for as many medical institutions in Donetsk and Luhansk oblasts as possible to be provided with this high-quality and vital equipment.”

Serhii Haidai, Head of the Luhansk Oblast State Administration and Head of the Regional Civil-military administration, said that through joint efforts with the world community Ukraine would be able to overcome the consequences of the COVID-19 pandemic and save human health and lives: "We’re grateful for the help we regularly receive from international and Ukrainian organizations. This is very important at a difficult time for Luhansk Oblast and the whole country."

The oxygen concentrators were supplied to six oblast hospitals, as well as medical institutions in Lysychansk, Rubizhne, Severodonetsk, Bilovodsk, Bilokurakine, Kreminna, Markivka, Milove, Novoaydar, Shchastya, Novopskov, Popasna, Svatove, Stanytsia Luhanska, Starobilska and Troitske.

The equipment was purchased under the UN Recovery and Peacebuilding Programme, with the financial support of the European Union, to meet the key needs of Luhansk Oblast health facilities combatting the COVID-19 outbreak.

Another fifty oxygen concentrators were recently transferred to hospitals in Donetsk Oblast.

Media enquiries

Maksym Kytsiuk, Communications Associate, the UN Recovery and Peacebuilding Programme, [email protected], +380 63 576 1839

The United Nations Recovery and Peacebuilding Programme (UN RPP) is being implemented by four United Nations agencies: the United Nations Development Programme (UNDP), the UN Entity for Gender Equality and the Empowerment of Women (UN Women), the United Nations Population Fund (UNFPA) and the Food and Agriculture Organization of the United Nations (FAO).

Thirteen international partners support the Programme: the European Union (EU), the European Investment Bank (EIB), the U.S. Embassy in Ukraine, and the governments of Canada, Denmark, Germany, Japan, the Netherlands, Norway, Poland, Sweden, Switzerland & the UK.

United States Announces Additional Funding for Conflict-Affected Populations in Ukraine and the Region [EN/UK]

Ukraine + 11 more

Ukraine - Complex Emergency Fact Sheet #11, Fiscal Year (FY) 2024

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Understanding business travel deductions

Here are some tax details all business travelers should know

Business travel deductions are available when employees must travel away from their tax home or main place of work for business reasons. A taxpayer is traveling away from home if they are away for longer than an ordinary day's work and they need to sleep to meet the demands of their work while away.

Travel expenses must be ordinary and necessary. They can't be lavish, extravagant or for personal purposes.

Employers can deduct travel expenses paid or incurred during a temporary work assignment if the assignment length does not exceed one year.

Travel expenses for conventions are deductible if attendance benefits the business. There are special rules for conventions held outside North America .

Deductible travel expenses include:

Travel by airplane, train, bus or car between your home and your business destination.
Fares for taxis or other types of transportation between an airport or train station and a hotel, or from a hotel to a work location.
Shipping of baggage and sample or display material between regular and temporary work locations.
Using a personally owned car for business.
Lodging and meals .
Dry cleaning and laundry.
Business calls and communication.
Tips paid for services related to any of these expenses.
Other similar ordinary and necessary expenses related to the business travel.

Self-employed individuals or farmers with travel deductions

Those who are self-employed can deduct travel expenses on Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) .
Farmers can use Schedule F (Form 1040), Profit or Loss From Farming .

Travel deductions for the National Guard or military reserves

National Guard or military reserve servicemembers can claim a deduction for unreimbursed travel expenses paid during the performance of their duty .

Recordkeeping

Well-organized records make it easier to prepare a tax return. Keep records such as receipts, canceled checks and other documents that support a deduction.

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Surviving British WW1 Tanks

Mark v composite tank.

This Surviving WW1 Russian Mark V Composite 'Hermaphrodite' Tank can be found Lugansk, Lugansk Oblast, Ukraine. Britain sent the 'White Russians' modified Mark V tanks that only had one gun to fight the Communist 'Red Russians'.

Surviving WW1 Russian Mark V Composite Hermaphrodite Tank Lugansk Oblast, Ukraine. This is the 'Male' side with the cannon.

At the end of the battle Cambrai the German army captured a lot of British tanks. German high command suddenly realised that there was a good chance of the attacking troops coming across enemy operated British tanks. During the first tank on tank battle against the new German A7V tank, the British female tanks involved in the engagement had to retreat is there were only armed with machine guns.

The British Mark V female tanks were designed to attack German infantry emplacements not engage in tank on tank battles. A decision was made to give them the fighting chance by adding a male six pounder cannon to one side of the vehicle. It went into the same positions forward facing machine gun. These tanks were given the nickname Hermaphrodites but officially known as Mark V Composite tanks.

Surviving WW1 Russian Mark V Composite Hermaphrodite Tank Lugansk Oblast, Ukraine. This is the 'Female' side with the two machine guns.

These two Mark V Composite Hermaphrodite Tanks were restored in the Lughansk Railway department repair factory 2009. They had been left rusting in local villages for over 90 years.

These Mark V Composite Hermaphrodite Tank had been shipped by the British, via Persia (Iran/Iraq) and up the Volga to Volgograd. Their purpose was to support the ‘White Russian' armies. A lot of these tanks were later engaged in a battle in eastern Ukraine. They were captured by the Red Army and used for a number of years until they were abandoned.

Where can I find other preserved Mark V Composite Hermaphrodite Tanks?

2x Luhansk, Luhansk Oblast, Ukraine
Historical Museum, Kharkhov, Kharkiv Oblast, Ukraine
Russian Tank Museum, Kubinka, Russia

Civil War tank books

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Military briefing: how close is Russia to taking Donbas after the fall of Luhansk?

A destroyed bridge linking Severodonetsk and Lysychansk

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Ben Hall in London and Roman Olearchyk in Kyiv

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Russia’s capture of the eastern Ukrainian city of Lysychansk, triggering the fall of the entire Luhansk province, was hailed as a victory by Vladimir Putin. But it is a symbolic more than a strategic one, say military experts.

The Russian president is still a long way from his objective of “liberating” the whole of the Donbas region, of which Luhansk is one half. On Monday he ordered his forces to press on into Donetsk province , the other half of Donbas, where the Ukrainians still control the cities of Slovyansk, Kramatorsk and Bakhmut with tens of thousands of troops.

Capturing the entire Donetsk region would require Russian forces to advance towards these heavily fortified cities 50km to 70km west of Lysychansk, and about the same again to reach the administrative border.

Despite Putin’s instruction to carry on, analysts and Ukrainian advisers say the war is likely to enter a new phase in which Kyiv’s troops try to use advanced weaponry freshly supplied by the west to cut Russian supply lines and destroy ammunition stocks and rear bases rather than cling on to territory.

The capture of all of Luhansk was a significant advance in Putin’s Donbas campaign and demonstrates that Russia’s military machine — grinding its way forward through intensive artillery bombardment — still has momentum, despite heavy losses. Lysychansk fell more quickly than some Ukrainian military advisers expected.

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But the Kremlin’s aim when it relaunched its offensive in the Donbas region in mid-April was to surround and kill or capture tens of thousands of Ukrainian troops in the so-called Joint Forces Operation, dealing a perhaps fatal blow to the country’s war effort.

Not only does that remain a distant prospect but Russian troops have also failed to meet their scaled-back objectives of encircling Ukrainian forces in smaller “cauldrons” on the way.

“The enemy wanted not only to capture Donetsk and Luhansk regions in their administrative borders but to do it through a cauldron of Ukrainian forces . . . Their aim was [to] encircle and destroy our grouping there,” said retired lieutenant general Ihor Romanenko, a former deputy head of Ukraine’s general staff.

“We conducted operations in Severodonetsk and Lysychansk to the point where we could degrade their military might, but after they amassed forces far exceeding ours, it was necessary to withdraw our forces to avoid the cauldron.”

The bulk of Luhansk territory seized by Russia was taken soon after the invasion began in February, said Oleksandr V Danylyuk, head of the Kyiv-based Centre for Defence Reforms, a think-tank. But they struggled to take the last fifth, which was properly contested by Kyiv’s forces.

Oleksiy Arestovych, an adviser to President Volodymyr Zelenskyy, said Ukraine had succeeded in slowing down the Russian advance, despite incurring heavy losses of up to 200 deaths a day.

“The main tasks were: to pin down the main enemy forces; inflict losses on them; buy time for the supply of western weapons and improve the second line of defence; to create conditions for our offensive operations in other sectors of the front,” Arestovych said.

As Russian forces edge further west they are likely to encounter even stiffer resistance. Kramatorsk and Slovyansk were well defended after eight years of fortifications by Ukrainian forces, Danylyuk said. Russia’s aim will be to come within artillery range and then bombard Ukrainian positions.

Oleksiy Melnyk, a former Ukrainian Air Force officer now at the Razumkov Centre think-tank in Kyiv, said not even heavy fortifications would withstand a Russian artillery barrage and aerial bombardment. Russian guns have been firing tens of thousands of shells a day in Luhansk.

To break or at least slow Russia’s artillery steamroller, Ukraine now needed to target Russian supply lines using long-range weapons, especially US-supplied multiple-launch rocket systems, known as Himars, said Melnyk. Only four have so far been deployed to the battlefield, but with a 70km range and pinpoint accuracy they are being used to great effect.

A Ukrainian rocket attack severely damaged a big Russian air base near the occupied southern city of Melitopol on Sunday, well beyond the normal range of Kyiv’s artillery. Ukraine also struck Russian arms depots in Donetsk province.

Kyiv needs many more Himars to turn the tide of the war.

“If Ukraine has more capabilities to destroy ground supply lines and ammunition depots and deliver strikes to destroy artillery positions, Russia will have to adjust their plans or change them significantly as before,” said Melnyk.

As well as a shortage of artillery ammunition, Ukraine has multiple other weaknesses, including a lack of skilled infantry and armoured vehicles to conduct offensive operations, a shortage of secure radio equipment and an inability to detect and take out Russian electronic warfare capabilities, according to a report by the Royal United Services Institute in London.

Russia is also suffering from manpower shortages and depleted stocks of modern armour, leaving it dependent on its vastly superior artillery firepower, according to western and Ukrainian analysts.

Putin’s instruction to his forces in Luhansk to “rest” while others join the battle was seen by Ukrainian analysts as a tacit admission of the heavy losses they have suffered as well as a possible need to bolster artillery supplies.

Meanwhile, Ukrainian counter-attacks towards the occupied southern city of Kherson at the mouth of the Dnipro river, are putting pressure on Russian forces.

Although a Ukrainian assault on the city itself seems unlikely, given the risk of civilian casualties, Ukraine could try to encircle Russian troops in pockets along the right bank of the river.

“The problem for Russia is that they do not have enough forces to secure both directions [south and east],” said Mykhailo Samus, director of the New Geopolitics Research Network, who spent 12 years in the Ukrainian armed forces.

“The Ukrainian side will demonstrate its intention to play in both directions. For Ukraine, the southern front is more important for now because of the sea and port access for exports.”

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15 Tax Tips for Travel Agents
With the click of the button, you can print out reports and use them to prepare and file your taxes. Backup Your Files. Tax tip for travel agents #2 piggybacks the first tip. Whether you use cloud-based software like TravelWorks or keep files on your computer, make sure your valuable files are protected.
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The sales tax associated with s ervices is a different sales tax animal as compared to tangible personal property. The taxing of certain travel-related services, such as lodging, can be taxable in some states. The likes of Expedia and Orbitz have a long history of battling various states in the courts even as localities start making deals with ...
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Table 1 Status of Local Government Litigation Against Online Travel Companies as of March 2012

Online Travel Services Are Generally Outside the Scope of Hotel Tax Statutes

Cities’ Lawsuits Have Not Succeeded but Have Produced Extended Litigation and Negative Impacts on Tourism Industry

Court Rulings on Whether Online Travel Companies Are Hotel Operators

Court Rulings on What Is Taxed by a Hotel Occupancy Tax

Court Rulings on Cities’ Claim that Not Taxing OTC services Would Undermine the Hotel Occupancy Tax

Federal Action Could Bar Discriminatory Taxation, Similar to Other Precedents Restraining State Damage to Interstate Commerce

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