Taking the Tax Man on Vacation
A new Tax Foundation report highlights how some localities are trying to extend hotel taxes to online booking service fees.
As if the stress of packing up a car for a roadtrip or getting through airport security wasn’t enough. From the Tax Foundation:
In cities in 22 states, local officials have com menced legal action against online travel companies like Expedia, Hotels.com, Orbitz, Priceline and Travelocity for what they claim are uncollected taxes. Travelers pay these websites when they use them to book a hotel room, with most of the payment going to the hotel but some to the website.
Every jurisdiction in the United States with a hotel has a tax on hotel rooms, and it often is imposed at a rate higher than taxes on other goods and services. The legal dispute centers on whether hotel taxes should be assessed on travel booking services, which in turn depends on whether cities’ hotel occupancy taxes should be calculated on the amount the hotel receives (which assumes that hotel taxes are paid only on the basis of hotel occupancy), or the amount the consumer pays (which assumes that the online companies are agents or resellers, not facilitators). Online travel companies neither own nor resell hotel rooms.
Taxes on hotel rooms are generally little more than a way of shifting the tax burden to non-residents (and nonvoters). When compared to taxes on other transactions, they are typically imposed at a much higher rate. These city litigation efforts are attempting to extract yet more revenue from travelers, this time by taxing Internet-based travel facilitation services. (my emphasis)
Hands off my hotels.com, tax man!