Florida online hotel tax ruling will be appealed
TALLAHASSEE, Fla.—A judge's ruling that online travel companies should be taxed only on what they pay for hotel rooms rather than the higher price they charge customers will be appealed, a lawyer for 17 Florida counties said on Tuesday.
Circuit Judge James Shelfer on Thursday ruled from the bench in favor of Expedia Inc. and other online companies after a three-day hearing in Tallahassee.
With millions in tourist development tax dollars at stake, Shelfer's decision will be challenged in the 1st District Court of Appeal, also in Tallahassee, said Bob Nabors, a lawyer for the 17 counties and four county tax collectors. The case could end up before the Florida Supreme Court.
"It's frustrating, but either side would have appealed," Nabors said. "We are going to do everything we can to fast-track the appeal."
Shelfer hasn't yet signed a written order, but a hearing transcript indicates he found Florida's tax law is too vague to support the counties' argument that it requires payment based on the full price customers are charged for their rooms.
"The defendants have made a strong case about whether or not a tax can be imposed if it is not clearly stated that they are subject to the tax," Shelfer said. Then, paraphrasing an attorney from the O.J. Simpson murder trial, he said, "If the glove don't fit, you have to acquit, I guess."
Shelfer said he was having trouble figuring out the Legislature's intent because lawmakers removed language from the state's tax law that would have supported the counties' argument when the tourist development levy was added in 1977.
The travel companies contend their markup pays for services, not hotel-room costs, so it is not subject to the tourist development tax, sometimes referred to as a "bed tax."
"We provide a travel service and travel services, as the law is written now, are not taxed in the state of Florida," said Elizabeth Herrington, a lawyer for Orbitz Worldwide Inc., Orbitz for Business Inc., Orbitz LLC and Trip Network Inc.
Herrington acknowledged that if the ruling had gone the other way, her clients would have appealed as well.
Other defendants are Expedia, Hotels.com LP, Delaware Hotwire Inc., Priceline.com Inc., Travelweb LLC, Sabre Holdings Corp., and Travelocity.com Inc.
The counties are Leon, Flagler, Lee, Manatee, Pinellas, Polk, Alachua, Nassau, Okaloosa, Seminole, Wakulla, St. Johns, Escambia, Charlotte, Walton, Hillsborough and Pasco. Tax collectors in Leon, Pinellas, Polk and Hillsborough also participated.
The lawsuit is one of several that have been filed over the issue. A case involving Broward County is pending before Circuit Judge Terry Lewis, also in Tallahassee.
In that case, online companies including Orbitz sued Broward, but the issue is the same, Herrington said. She declined further comment because the case hasn't yet been decided.
In 2010, several travel companies agreed to pay $6.5 million to 32 counties to settle a federal class-action lawsuit. The counties agreed they wouldn't collect tax on full retail prices from July 1, 2010 until July 1, 2012 except for Priceline, which is covered by the deal through July 1, 2013.
Orange County last year approved a separate confidential settlement with Expedia.
Bills have been filed in the Legislature in recent years to ensure travel companies wouldn't have to pay tax on their markups. The House passed such a bill 77-38 in 2011, but it didn't get a floor vote in the Senate. This year, similar legislation never got out of committee in either chamber.
