by David Royse
The News Service of Florida
Attorney General Pam Bondi suggested Thursday that the issue of whether online travel bookers should pay taxes on the full amount that customers pay for a room, or the discounted rate, needs to be cleared up after years of legislative inaction, possibly by a Department of Revenue rule.
Such a rule likely couldn’t take effect without legislative approval anyway, though, because the law gives lawmakers the final say when executive agency rules cost more than a certain amount.
The state law dealing with taxes on hotel rooms, written in 1949, obviously didn’t contemplate companies like Expedia, Orbitz or others who book blocks of rooms and then sell them at a discount online.
Such companies may pay a hotel $100 for a room, for example, and then mark it up to $130.
But the company pays the hotel taxes to be submitted to the state on the $100 in that example, and argues that the mark-up isn’t taxable because it’s essentially a fee for its service. Florida doesn’t tax services.
The issue has been fought over for years, with bills filed nearly every year for a decade seeking to clarify whether the mark-up is taxable or not.
Counties would like to see the higher amount remitted, because many of them fund tourist development efforts through bed taxes. The companies and the counties are also engaged in several lawsuits over the matter, seeking to clarify whether the tax is due on the lower or higher amount.
Bondi said during a Cabinet meeting Thursday that the issue needs to be resolved. “We need some action sooner rather than later,” she said.
Bondi said after the meeting that she doesn’t have a position on which side the state Department of Revenue should come down on, only that she would like to see the issue resolved.
Currently, the Department of Revenue allows the companies to pay the lower amount, said department Executive Director Lisa Vickers.
She said that doesn’t mean the agency has taken a position. She insists it doesn’t have a position. She said she simply doesn’t believe that the agency should take taxpayers to court to force them to pay the higher amount when it’s not clear in the law how much tax should be collected.
Bondi and the Cabinet requested that the agency draw up a possible plan that would begin the process of determining through rulemaking how much tax is due, essentially have the agency make a decision and go around the Legislature.
Vickers pointed out, and other members of the Cabinet agreed, however, that the Legislature likely would still have the final say, and ultimately it may be the courts.
The Legislature must approve any regulations that result in costs of more than $200,000 a year or $1 million over five years. Vickers said she assumes that a rule would end up triggering that law, meaning legislators would ultimately still decide.
If a decision is made by the agency: “That rule will be challenged,” Vickers said. “It’s going to end up in court anyway.”
The Department of Revenue will propose a possible plan of action at the next Cabinet meeting, said Vickers.