Discounted Hotel Rooms-Internet Sales  
The Florida Senate Committee on Finance and Taxation has released a draft report entitled "Application of the Tourist Development Tax to the Sale of Discounted Hotel Rooms Over the Internet and the Hotel Rewards Points Program," Report No. 2005-131. With respect to the first topic, the issue is whether State sales tax and tag-along local option taxes like the tourist development tax (TDT)applies to the amount paid the customer when booking a hotel room via Internet or to the discounted amount paid by the Internet seller/marketer. The TDT is imposed by 53 of Florida 67 counties and is locally-administered in 38 of those 53 counties. The report cites projections to the effect that on-line bookings will account for nearly one-third of all bookings by 2006 and indicates that the "standard mark-up on such Internet room rates is 25 percent." Thus the Internet marketer or seller might receive $25 when a customer books a hotel room at a $100 per night rate, and the question is whether transient rentals tax and TDT is due on $75 or $100. The draft study recommends that legislation be enacted applying tax to the full amount, not the discounted amount, and that the taxes be remitted either solely by the hotel or on a dual-remittance basis (on the discounted rate by the hotel and on the mark-up by the Internet marketer.

The study also takes a look at the question whether any consideration is being paid (so as to give rise to tax) when a hotel guest redeems previously-acquired points to secure lodging. A number of hotels had been remitting tax, but several million dollars in refund claims are now pending. The draft study recommends a compromise, like that in effect in Texas, which takes account of the fact that hotels are required to fund central accounts with a percentage of room collections on which tax has already been paid

Posted: 2004-10-29 00:00:00.0

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