The Florida Supreme Court held that Counties may not use the Tourist Development Tax to tax On-Line Travel Companies, like Expedia, the total monetary amount charged to secure hotel reservations. Counties may only tax the actual amount that the On-Line Travel Company pays for the hotel reservation. Alachua Cnty, et al. v. Expedia, et al., Case No. 13-838 (Fla. June 11, 2015).
Alachua County, along with several other counties and tax collectors (Counties), filed a declaratory judgment action against Expedia, and other on-line travel companies. The Counties were seeking a court ruling that Florida’s Tourist Development Tax, section 125. 0104, Florida Statutes, permitted counties to tax on-line travel companies for the total amount a customer pays for making a hotel reservation. On-line travel companies, like Expedia, enter into business agreements with hotels setting the price of the rooms. Customers make reservations for a hotel on the on-line travel company’s website. The on-line travel company’s reservation includes a “mark-up” price that is greater than the monetary amount provided to the hotel. The Counties sought to tax the total amount paid by the customer to the on-line travel company for securing the hotel reservation; rather than the lower monetary amount paid to the hotel.
The Florida Supreme Court in reviewing the Tourist Development Tax stated “we find no clear legislative intent to require taxation on the total monetary charges incurred by customers who obtain reservations for hotel rentals through the [On-Line Travel Company’s] Internet-based services.” The Court noted that in the legislative history of the tax, that “tax required by the [Tourist Development Tax and Transient Rental Tax] pertains to anything other than the monetary amount hotels charge for room rents.” Further, the Supreme Court recognized that the Florida “Legislature’s presumptive awareness of the issue for which the Counties now seek redress reflects the Legislature’s willingness to maintain the status quo of not subjecting the [on-line travel company’s] markup charges to the transient rental taxes.”