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Friday, August 16, 2013
by Priya Nair
The National Conference of State Legislatures (NCSL), the principal advocacy organization for state legislators, unanimously approved a resolution calling on states to consider legislation that would require online travel companies to remit hotel occupancy taxes on the full rental price paid by customers, and not simply the wholesale rate OTCs have negotiated with hotels, Tom Gilroy, a correspondent with Bloomberg BNA writes in this week's issue of the Weekly State Tax Report.
The vote by the Executive Committee Task Force on State and Local Taxation of NCSL adds that organization's considerable weight to long-standing criticism by cities, counties, states, and the hotel industry that the OTCs' "merchant model" shortchanges financially-strapped municipalities of tax revenue, while putting local hotels at a competitive disadvantage, Gilroy writes.
Given NCSL's influence among state lawmakers, the vote also raises the possibility that states other than the handful that already have looked at the issue will now do so.
Many in the lodging industry have long maintained that their members are required to remit occupancy taxes on the full price of rooms rented directly through hotels, while the OTCs pay on the lesser, wholesale rate, Gilroy explains.
Major online firms such as Expedia Inc., Orbitz LLC, Travelocity.com LP and Priceline.com Inc. have argued for years in lawsuits filed around the country that the difference between what they agree to pay hotels to list rooms for rent on their websites and what they charge customers is a service fee for "facilitating" the transaction, and thus is not subject to occupancy taxes, Gilroy explains.
But the NCSL committee said it had studied the issue and determined that states should consider legislation that requires the companies to remit taxes based on the full rental price paid by the user.
The committee also said states should consider legislation requiring the OTCs to:
• publicly and explicitly display charges and resort fees leading to the final price to the user; and
• require that taxes, fees, and service charges be separately stated instead of bundling them together.
Check out the complete story by Tom Gilroy found in this week's issue of the Weekly State Tax Report.
In other developments…
State Budget and Tax Actions [August 2013], a new preliminary report by the National Conference of State Legislatures
Oregon - Unitary reporting group includes 'tax haven' entities, a new report by PwC
State Tax Revenues Up But Volatility Continues, according to Rockefeller Institute news release and report
Compiled by Priya Nair
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