Read Our Lips – No New Taxes
Good news for online travel companies came last week courtesy of the U.S. Court of Appeals for the Sixth Circuit. The Cincinnati based appellate court found that services such as Hotels.com, Expedia, and Orbitz do not owe occupancy taxes to a number of Ohio municipalities. The municipalities were seeking to recover taxes on the difference between the wholesale rate the services pay for the rooms and the rate those services offer the public. According to the municipalities, that mark up should be subject to the occupancy tax. The court sided with the services largely because the wording of the ordinances didn’t support the argument made by the municipalities. Those ordinances placed the tax burden on the “owner” or “operator” of the hotel. According to the opinion, “[t]hough the online travel companies advertise places that offer sleeping accommodations, the online travel companies do not advertise themselves to be places where sleeping accommodations are offered.” It seems to me that this is a pretty easy problem for a local municipality to fix – rewrite the ordinance to account for services that no one envisioned when the ordinance was originally drafted. This will make that little gnome unhappy, but I suspect it’s worth a shot.