In a major victory for the online travel industry, the Florida Supreme Court on Thursday rejected arguments that companies such as Expedia and Travelocity should pay more in county tourist-development taxes.
Five of the seven justices sided with the industry in a long-running legal and political battle that has involved at least 20 counties.
The dispute has centered on whether the companies have to pay tourist-development taxes on the full amounts they charge when customers book hotel rooms. The companies serve as sorts of middlemen between travelers and hotels, charging customers for room rentals and fees related to providing the service.
Counties argued that the companies should pay taxes on the full amounts, while the industry argued that the taxes are owed only on the portions of the money that go to room rentals. The companies contended, at least in part, that the other portions are service charges, which are not subject to the hotel bed tax.
Justice James E.C. Perry, in an opinion joined by Chief Justice Jorge Labarga and Justice Peggy Quince, pointed to what he described as the "plain language" of the state's tourist-development tax law.
"In so doing, we have determined that the TDT (tourist development tax) contains no language, as the counties assert, that clearly directs that it should be applied to the markup charges and service fees associated with merchant model transactions for hotel room rentals,'' Perry wrote. "Moreover, despite the operation of a given business model transaction, the monetary amount the hotels require for occupancy is the sole determinant for the charges that are taxable under the TDT."
Justices Barbara Pariente and Charles Canady also ruled in favor of the industry, though they did not sign onto Perry's reasoning.
Justices R. Fred Lewis and Ricky Polston, meanwhile, dissented, with Lewis writing that the "plain and ordinary language" of the law required the taxes to be collected on the full amounts charged by the online-travel companies.
"The total consideration charged is the total amount charged to the customer to reserve the hotel room, regardless of whether that reservation is made through an OTC (online travel company) or directly through the hotel,'' said Lewis' dissent, which was joined by Polston. "To levy the tax on only a portion of the consideration charged is contrary to the plain language of the statute."
While siding with the online-travel industry, Pariente wrote that she didn't think the law was clear.
"These types of policy concerns are quintessentially within the legislative domain and could and should be addressed by the Legislature," Pariente wrote. "It is not this court's place to impose its view of the better policy, especially when it comes to a taxation scheme. … Because the statute is not clear and unambiguous, I would rely primarily on the principle that the lack of clarity in the statutory language should be construed in favor of the taxpayers and against the taxing authority."
Thursday's decision came in a case that included 17 counties as plaintiffs and several online-travel companies as defendants. Those counties were Alachua, Charlotte, Escambia, Flagler, Hillsborough, Lee, Leon, Manatee, Nassau, Okaloosa, Pasco, Pinellas, Polk, St. Johns, Seminole, Wakulla and Walton. Also offering arguments at the Supreme Court were Broward, Osceola and Volusia counties, which were involved in similar cases.
The Supreme Court upheld a 2013 ruling by the 1st District Court of Appeal. Amid the long-running legal battles, the Legislature considered — but did not pass — bills that could have cleared up the tax questions.
Photo credit: "hotel" by Lindsey Turner is used under CC BY 2.0.
