Multi-State Tax Law Blog
Florida’s hotel reservation industry recently received an important victory relating to Tourist Development Tax (“TDT”). TDT is a tax imposed on the privilege of renting, leasing or letting “for consideration any living quarters or accommodations in any hotel . . ., or condominium for a term of six months or less.” § 125.0104(3)(a)1., Fla. Stat. Notably, the TDT is due on the consideration paid for occupancy in the county. § 125.0104(3)(a)1., Fla. Stat.
In 2015, the Florida Supreme Court held that the “consideration paid for occupancy” is limited to the actual rental amount paid for occupancy of the room and not to mark-up charges and service charges associated with the reservations. See Alachua County v. Expedia, Inc., 175 So. 3d 370 (Fla. 2015).
The issue in Sarasota Surf & Racquet Club Condominium Assn., Inc. v. Sarasota County, et al., Case No. 2015 CA 002612 NC (Fla. 12th Cir, July 11, 2016) was whether reservation and cleaning fees charged by a condominium association to guests during the reservation process were subject to TDT. The County argued that the fees were part of the total consideration paid for occupancy and therefore subject to TDT. The association argued that, pursuant to Expedia, only the rental amount was subject to TDT, not the reservation and cleaning fees charged in connection with the reservation.
The facts in the Sarasota matter are substantially similar to Expedia. The only distinction (without a difference) was that condominium associations charged the fees in Sarasota and online travel companies charged the fees in Expedia.
In Expedia, customers would pay online travel companies for hotel room rentals and the companies would then remit payment to the hotel for the room rental amount and retain the reservation booking fee incurred for facilitating the rental. A number of Florida Counties brought a court action against the companies arguing that TDT should apply to the room rental amount in addition to the booking fee. The companies argued that only the room rental amount, not the booking fee was subject to TDT. The Florida Supreme Court held that the privilege being exercised for purposes of TDT is renting rooms to tourists and therefore, TDT only applied to the monetary amount charged for room rentals, not the additional charges associated with the reservations. See Expedia, 175 So. 3d at 733-35.
Sarasota Surf & Racquet Club Condominium Association, Inc. (“Association”), similarly offers rentals on behalf of unit owners, charging a booking fee and cleaning fee separate from the amount charged for occupancy of the unit. Despite the straight-forward holding in Expedia, Sarasota County determined that TDT applied to the total amount consisting of the room rental, booking fee and cleaning fee.
Based on the assessment and the threat of continuing assessments, the Association was forced to bring the action challenging the County’s determination. The Association and the County then each filed Motions for Final Summary Judgment and oral argument was heard in Sarasota County before the Honorable Judge Rochelle T. Curley on July 7, 2016. After reviewing the pleadings and hearing oral argument, the Court entered Final Summary Judgment in favor of the Association. The Court, in reliance on Expedia, held that the booking fees and cleaning fees are not subject to TDT. Judge Curley’s Order makes it clear that any charge except charges for actual occupancy of the room are outside the scope of Florida’s sales tax and the TDT.
It should be noted that the Sarasota case was argued and won by our law firm. Partner, Joe Moffa, and associate attorney, Jonathan Taylor, argued on behalf of the Association.
About the author: Mr. Taylor is a multi-state sales and use tax attorney and an associate in the law firm of Moffa, Sutton, & Donnini, P.A., based in Fort Lauderdale, Florida. Mr. Taylor’s primary practice area is multi-state sales and use tax controversy. Mr. Taylor also practices in the area of cigarette & tobacco tax and general commercial litigation. Mr. Taylor received his law degree from Nova Southeastern University, Shepard Broad Law Center. You can contact Mr. Taylor via email at JonathanTaylor@FloridaSalesTax.com or call 954-234-2884.