Taxation of Hotel Rewards Points
The Department of Revenue continues to receive inquiries regarding the applicability of the State transient rentals tax, and the coattail local option tourist development tax (TDT), to hotel rewards points. The issue is included in a Florida Senate Interim Project Report (2005-131) treated in an earlier article here–see below, “Discounted Hotel Rooms –Internet Sales.” The question is whether a hotel receives consideration, subject to tax, when a guest redeems points to stay at a participating hotel. Hotels were generally collecting and remitting tax, but began filing refund claims with the State and local governments in mid-2004. Most of those claims are still pending.
In response to those claims and pressed by local governments, the Department is considering the issuance of a Taxpayer Information Publication (TIP) or the commencement of rulemaking so as to stake out its position in the matter. A TIP has been drafted, but no draft rule is in existence at this point. The Department has announced the possibility of a rulemaking workshop, the precursor to actual rulemaking, but has not scheduled a date for the workshop. A TIP is informational; it is not binding on the Department or local government. TIPs are ordinarily used just to give informal notice to taxpayers and practitioners about some development that is self-executing or not otherwise in need of regulatory interpretation at the time.
Agency statements of general applicability, however, must take the form of a rule. Fifty-three of Florida’s 67 counties have adopted the TDT and 38 of them self-administer the TDT. Those that self-administer the tax are required by law to conform to Department rules on the subject, but the issue at hand is not addressed in any extant Department rule. Representatives of the counties that self-administer the tax formed the Florida Tourist Development Tax Association in 1993 and can be expected to advocate an aggressive tax approach when rulemaking begins. Hotels that issue rewards points or accept them as participants in a rewards points program should monitor any TIP or draft rule that the Department issues. Action is expected in early 2006.
Posted: 2005-12-05 00:00:00.0
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