sc13-838 brief of ahla and aif - supreme court of florida...2013/10/17 · many of ahla's...
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TABLEOFCONTENTS
TABLE OF AUTHORITIES n - m
STATEMENT OF IDENTITY AND INTEREST OF AMICI 1 - 2
SUMMARY OF ARGUMENT 3
ARGUMENT 4 - 11
1 THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST 4 - 9
II FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLE FOR RESPONDENTS 9 - 10
Ill THE DISTRICT COURTS RULING CREATES AN
UNEVEN PLAYING FIELD IN A COMPETITIVE INDUSTRY 10 - 12
CONCLUSION 13
CERTIFICATE OF SERVICE 14
CERTIFICATE OF COMPLIANCE 15
1
TABLE OF AUTHORITIES
CASES PAG E
A lachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013) review granted 2013 WL 5273037 (Fla 20 13) 6 7 11
American Telephone and Telegraph v Florida
Department ofRevenue
764 So 2d 665 (Fla 1st DCA 2000) 8
County ofMonroe Florida v Pricelinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009) 7
Miami Dolphins L TD v Metropolitan Dade County etc
394 So 2d 981 (Fla 1981) 4
Orange County v Expedia Inc
985 So 2d 622 (Fla 5th DCA 2008) 6
FLORIDA STATUTES
Chapter 212 8
Section 1250104 1 2 3 4 6 8
Section 1250104(3)(a)l 6
Section 1250104(3)(a)2a 7
Section 1250104(3)(c) 6 7
Section 1250104(5) 9
11
TABLE OF AUTHORITIES continued
PAGE
OTHER AUTHORITIES
Senate Bill 376 9
Florida Senate Staff Bill Analysis and Fiscal Impact Statement CSSB 376 (April 7 2011) 4
Application of the Tourist Development Tax to the Sales ofDiscounted Hotel Rooms Over the Internet and the Hotel
Reward Points Program The Florida Senate Report
Number 2005-131 (November 2004) 4 5 8
Update to Interim Project Report 2005-13 ) Application ofthe
Iransient llental Tax to Accommodations Purchased via the
Internet The Florida Senate Issue Brief Number 2009-320
(October 2008) 4 10
Bloornberg Businessweek Florida Jumps into Fray Over Online
Hotel Taxes March 1 2011 10
Walter Hellerstein Memorandum to the National Conference of
State Legislature RE Travel Intermediaries July 16 2009 1 1
Michael Mazerov State and Local Governments Should Close
Online Hotel Tax Loophole and Collect Taxes Owed Center on
Budget and Policy Priorities April 12 20 l 1 10
111
STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIA E
The American Hotel and Lodging Association (AHLA) is a national
association which represents all sectors and stakeholders in the lodging industry
including individual hotel property owners hotel franchises and management
companies AHLA provides representation before governmental agencies
legislative bodies and judicial proceedings to ensure a positive business climate
Many of AHLAs members pay the Tourist Development Tax authorized by
section 1250104 Florida Statutes and are therefore very interested in the
equitable administration of that statute The District Court ruled that the Tourist
Development Tax did not apply to fees retained by online travel companies As a
result of this ruling the vast majority of AHLA members are placed at a
competitive disadvantage with respect to marketing their own rooms and are
paying a disproportionate share of the tax
Associated Industries of Florida (AIF) is a non-profit corporation
organized and existing under the laws of Florida AIF is one of the largest
associations of business trade commercial and professional organizations in the
State of Florida It represents the interests of over 10000 corporations
professional associations partnerships and proprietorships AIF has appeared as
amicus curiae in numerous appeals filed within Florida and represents its members
in critical matters before the Florida Legislature the executive branch regulatory
agencies and courts in Florida
The tourism industry is vital to Floridas economy and virtually all of AIFs
members are affected directly or indirectly by its well-being The proceeds from
the Tourist Development Tax are dedicated to improving Florida finance local
infimiddotastructure such as museums parks sports stadiums convention centers tourist
information centers and beaches - all things that help improve Floridas tourism
industry and thereby positively affect AIFs members The decision of this Court
to uphold or reverse the District Courts ruling will therefore have a substantial
effect on AIF and its members
2
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
TABLEOFCONTENTS
TABLE OF AUTHORITIES n - m
STATEMENT OF IDENTITY AND INTEREST OF AMICI 1 - 2
SUMMARY OF ARGUMENT 3
ARGUMENT 4 - 11
1 THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST 4 - 9
II FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLE FOR RESPONDENTS 9 - 10
Ill THE DISTRICT COURTS RULING CREATES AN
UNEVEN PLAYING FIELD IN A COMPETITIVE INDUSTRY 10 - 12
CONCLUSION 13
CERTIFICATE OF SERVICE 14
CERTIFICATE OF COMPLIANCE 15
1
TABLE OF AUTHORITIES
CASES PAG E
A lachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013) review granted 2013 WL 5273037 (Fla 20 13) 6 7 11
American Telephone and Telegraph v Florida
Department ofRevenue
764 So 2d 665 (Fla 1st DCA 2000) 8
County ofMonroe Florida v Pricelinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009) 7
Miami Dolphins L TD v Metropolitan Dade County etc
394 So 2d 981 (Fla 1981) 4
Orange County v Expedia Inc
985 So 2d 622 (Fla 5th DCA 2008) 6
FLORIDA STATUTES
Chapter 212 8
Section 1250104 1 2 3 4 6 8
Section 1250104(3)(a)l 6
Section 1250104(3)(a)2a 7
Section 1250104(3)(c) 6 7
Section 1250104(5) 9
11
TABLE OF AUTHORITIES continued
PAGE
OTHER AUTHORITIES
Senate Bill 376 9
Florida Senate Staff Bill Analysis and Fiscal Impact Statement CSSB 376 (April 7 2011) 4
Application of the Tourist Development Tax to the Sales ofDiscounted Hotel Rooms Over the Internet and the Hotel
Reward Points Program The Florida Senate Report
Number 2005-131 (November 2004) 4 5 8
Update to Interim Project Report 2005-13 ) Application ofthe
Iransient llental Tax to Accommodations Purchased via the
Internet The Florida Senate Issue Brief Number 2009-320
(October 2008) 4 10
Bloornberg Businessweek Florida Jumps into Fray Over Online
Hotel Taxes March 1 2011 10
Walter Hellerstein Memorandum to the National Conference of
State Legislature RE Travel Intermediaries July 16 2009 1 1
Michael Mazerov State and Local Governments Should Close
Online Hotel Tax Loophole and Collect Taxes Owed Center on
Budget and Policy Priorities April 12 20 l 1 10
111
STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIA E
The American Hotel and Lodging Association (AHLA) is a national
association which represents all sectors and stakeholders in the lodging industry
including individual hotel property owners hotel franchises and management
companies AHLA provides representation before governmental agencies
legislative bodies and judicial proceedings to ensure a positive business climate
Many of AHLAs members pay the Tourist Development Tax authorized by
section 1250104 Florida Statutes and are therefore very interested in the
equitable administration of that statute The District Court ruled that the Tourist
Development Tax did not apply to fees retained by online travel companies As a
result of this ruling the vast majority of AHLA members are placed at a
competitive disadvantage with respect to marketing their own rooms and are
paying a disproportionate share of the tax
Associated Industries of Florida (AIF) is a non-profit corporation
organized and existing under the laws of Florida AIF is one of the largest
associations of business trade commercial and professional organizations in the
State of Florida It represents the interests of over 10000 corporations
professional associations partnerships and proprietorships AIF has appeared as
amicus curiae in numerous appeals filed within Florida and represents its members
in critical matters before the Florida Legislature the executive branch regulatory
agencies and courts in Florida
The tourism industry is vital to Floridas economy and virtually all of AIFs
members are affected directly or indirectly by its well-being The proceeds from
the Tourist Development Tax are dedicated to improving Florida finance local
infimiddotastructure such as museums parks sports stadiums convention centers tourist
information centers and beaches - all things that help improve Floridas tourism
industry and thereby positively affect AIFs members The decision of this Court
to uphold or reverse the District Courts ruling will therefore have a substantial
effect on AIF and its members
2
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
TABLE OF AUTHORITIES
CASES PAG E
A lachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013) review granted 2013 WL 5273037 (Fla 20 13) 6 7 11
American Telephone and Telegraph v Florida
Department ofRevenue
764 So 2d 665 (Fla 1st DCA 2000) 8
County ofMonroe Florida v Pricelinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009) 7
Miami Dolphins L TD v Metropolitan Dade County etc
394 So 2d 981 (Fla 1981) 4
Orange County v Expedia Inc
985 So 2d 622 (Fla 5th DCA 2008) 6
FLORIDA STATUTES
Chapter 212 8
Section 1250104 1 2 3 4 6 8
Section 1250104(3)(a)l 6
Section 1250104(3)(a)2a 7
Section 1250104(3)(c) 6 7
Section 1250104(5) 9
11
TABLE OF AUTHORITIES continued
PAGE
OTHER AUTHORITIES
Senate Bill 376 9
Florida Senate Staff Bill Analysis and Fiscal Impact Statement CSSB 376 (April 7 2011) 4
Application of the Tourist Development Tax to the Sales ofDiscounted Hotel Rooms Over the Internet and the Hotel
Reward Points Program The Florida Senate Report
Number 2005-131 (November 2004) 4 5 8
Update to Interim Project Report 2005-13 ) Application ofthe
Iransient llental Tax to Accommodations Purchased via the
Internet The Florida Senate Issue Brief Number 2009-320
(October 2008) 4 10
Bloornberg Businessweek Florida Jumps into Fray Over Online
Hotel Taxes March 1 2011 10
Walter Hellerstein Memorandum to the National Conference of
State Legislature RE Travel Intermediaries July 16 2009 1 1
Michael Mazerov State and Local Governments Should Close
Online Hotel Tax Loophole and Collect Taxes Owed Center on
Budget and Policy Priorities April 12 20 l 1 10
111
STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIA E
The American Hotel and Lodging Association (AHLA) is a national
association which represents all sectors and stakeholders in the lodging industry
including individual hotel property owners hotel franchises and management
companies AHLA provides representation before governmental agencies
legislative bodies and judicial proceedings to ensure a positive business climate
Many of AHLAs members pay the Tourist Development Tax authorized by
section 1250104 Florida Statutes and are therefore very interested in the
equitable administration of that statute The District Court ruled that the Tourist
Development Tax did not apply to fees retained by online travel companies As a
result of this ruling the vast majority of AHLA members are placed at a
competitive disadvantage with respect to marketing their own rooms and are
paying a disproportionate share of the tax
Associated Industries of Florida (AIF) is a non-profit corporation
organized and existing under the laws of Florida AIF is one of the largest
associations of business trade commercial and professional organizations in the
State of Florida It represents the interests of over 10000 corporations
professional associations partnerships and proprietorships AIF has appeared as
amicus curiae in numerous appeals filed within Florida and represents its members
in critical matters before the Florida Legislature the executive branch regulatory
agencies and courts in Florida
The tourism industry is vital to Floridas economy and virtually all of AIFs
members are affected directly or indirectly by its well-being The proceeds from
the Tourist Development Tax are dedicated to improving Florida finance local
infimiddotastructure such as museums parks sports stadiums convention centers tourist
information centers and beaches - all things that help improve Floridas tourism
industry and thereby positively affect AIFs members The decision of this Court
to uphold or reverse the District Courts ruling will therefore have a substantial
effect on AIF and its members
2
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
TABLE OF AUTHORITIES continued
PAGE
OTHER AUTHORITIES
Senate Bill 376 9
Florida Senate Staff Bill Analysis and Fiscal Impact Statement CSSB 376 (April 7 2011) 4
Application of the Tourist Development Tax to the Sales ofDiscounted Hotel Rooms Over the Internet and the Hotel
Reward Points Program The Florida Senate Report
Number 2005-131 (November 2004) 4 5 8
Update to Interim Project Report 2005-13 ) Application ofthe
Iransient llental Tax to Accommodations Purchased via the
Internet The Florida Senate Issue Brief Number 2009-320
(October 2008) 4 10
Bloornberg Businessweek Florida Jumps into Fray Over Online
Hotel Taxes March 1 2011 10
Walter Hellerstein Memorandum to the National Conference of
State Legislature RE Travel Intermediaries July 16 2009 1 1
Michael Mazerov State and Local Governments Should Close
Online Hotel Tax Loophole and Collect Taxes Owed Center on
Budget and Policy Priorities April 12 20 l 1 10
111
STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIA E
The American Hotel and Lodging Association (AHLA) is a national
association which represents all sectors and stakeholders in the lodging industry
including individual hotel property owners hotel franchises and management
companies AHLA provides representation before governmental agencies
legislative bodies and judicial proceedings to ensure a positive business climate
Many of AHLAs members pay the Tourist Development Tax authorized by
section 1250104 Florida Statutes and are therefore very interested in the
equitable administration of that statute The District Court ruled that the Tourist
Development Tax did not apply to fees retained by online travel companies As a
result of this ruling the vast majority of AHLA members are placed at a
competitive disadvantage with respect to marketing their own rooms and are
paying a disproportionate share of the tax
Associated Industries of Florida (AIF) is a non-profit corporation
organized and existing under the laws of Florida AIF is one of the largest
associations of business trade commercial and professional organizations in the
State of Florida It represents the interests of over 10000 corporations
professional associations partnerships and proprietorships AIF has appeared as
amicus curiae in numerous appeals filed within Florida and represents its members
in critical matters before the Florida Legislature the executive branch regulatory
agencies and courts in Florida
The tourism industry is vital to Floridas economy and virtually all of AIFs
members are affected directly or indirectly by its well-being The proceeds from
the Tourist Development Tax are dedicated to improving Florida finance local
infimiddotastructure such as museums parks sports stadiums convention centers tourist
information centers and beaches - all things that help improve Floridas tourism
industry and thereby positively affect AIFs members The decision of this Court
to uphold or reverse the District Courts ruling will therefore have a substantial
effect on AIF and its members
2
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIA E
The American Hotel and Lodging Association (AHLA) is a national
association which represents all sectors and stakeholders in the lodging industry
including individual hotel property owners hotel franchises and management
companies AHLA provides representation before governmental agencies
legislative bodies and judicial proceedings to ensure a positive business climate
Many of AHLAs members pay the Tourist Development Tax authorized by
section 1250104 Florida Statutes and are therefore very interested in the
equitable administration of that statute The District Court ruled that the Tourist
Development Tax did not apply to fees retained by online travel companies As a
result of this ruling the vast majority of AHLA members are placed at a
competitive disadvantage with respect to marketing their own rooms and are
paying a disproportionate share of the tax
Associated Industries of Florida (AIF) is a non-profit corporation
organized and existing under the laws of Florida AIF is one of the largest
associations of business trade commercial and professional organizations in the
State of Florida It represents the interests of over 10000 corporations
professional associations partnerships and proprietorships AIF has appeared as
amicus curiae in numerous appeals filed within Florida and represents its members
in critical matters before the Florida Legislature the executive branch regulatory
agencies and courts in Florida
The tourism industry is vital to Floridas economy and virtually all of AIFs
members are affected directly or indirectly by its well-being The proceeds from
the Tourist Development Tax are dedicated to improving Florida finance local
infimiddotastructure such as museums parks sports stadiums convention centers tourist
information centers and beaches - all things that help improve Floridas tourism
industry and thereby positively affect AIFs members The decision of this Court
to uphold or reverse the District Courts ruling will therefore have a substantial
effect on AIF and its members
2
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
in critical matters before the Florida Legislature the executive branch regulatory
agencies and courts in Florida
The tourism industry is vital to Floridas economy and virtually all of AIFs
members are affected directly or indirectly by its well-being The proceeds from
the Tourist Development Tax are dedicated to improving Florida finance local
infimiddotastructure such as museums parks sports stadiums convention centers tourist
information centers and beaches - all things that help improve Floridas tourism
industry and thereby positively affect AIFs members The decision of this Court
to uphold or reverse the District Courts ruling will therefore have a substantial
effect on AIF and its members
2
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
SUMMARY OF ARGUMFsNT
The unambiguous language in section 1250104 Florida Statutes requires
every person who rents a hotel room to pay tax on the total consideration charged
for such lease or rental However under the District Courts ruling online travel
companies are only required to pay tax on the portion of consideration that an
online travel company remits to the hotel This is contrary to not only the plain
language of statute but also to the specific intent of the Legislature and over three
decades of Florida case law interpreting section 1250104
Moreover by not requiring online travel companies to pay the required tax
the District Courts ruling deprives Floridas counties of revenue in a time of great
need The Tourist Development Tax - as the statute itself recognizes - is an
important source of revenue that Florida counties use to finance infrastructure such
as aquamarines museums parks sports stadiums convention centers tourist
information centers and beach restoration The online travel companies though
have eroded the tax base and are reaping profits at the counties expense This was
certainly not the intent of the Legislature nor is permitted under the plain language
o f section 1250104
Finally by permitting online travel companies to evade tax liability the
District Courts ruling creates a discriminatory tax that unfairly prejudices local
hotels and puts them at a competitive disadvantage with the travel companies
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
ARGUMENT
I THE UNAMBIGUOUS LANGUAGE IN SECTION 1250104 FLORIDA STATUTES PROVIDES FOR TAXATION OF THE TOTAL FUNDS PAID BY THE TOURIST
The Tourist Development Tax codified in section 1250104 Florida
Statutes was enacted in 1977 prior to the phenomenal growth in the online travel
company business See Florida Senate Committee on Government Efficiency
Appropriations Application of the Tourist JJevelopment Tax to the Sales of
Discounted Hotel Rooms Over the Internet and the Hotel Reward Points Program
Report Number 2005-131 (Nov 2004) Over the last ten years changes to the
statute have been studied although none have been enacted Id Florida Senate
Committee on Finance and Tax Update to Interim Project Report 2005-131
Application of the Transient Rental Tax to Accommodations Purchased via the
Internet Issue Brief Number 2009-320 (Oct 2008) Florida Senate Staff Bill
Analysis and Fiscal Impact Statement CSSB 376 (April 7 201 l) Section
1250104 has been held constitutional as imposing a tax on all renters of the
covered types of premises and on the total rental charged every person who
rents leases or lets for consideration any living quarters Miami Dolphins L TD v
Metropolitan Dade County 394 So 2d 981 (Fla 1981)
Rather than paying tax on the total consideration charged for such lease or
rental as directed by the statute online travel companies only pay tax on the
4
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
portion of the consideration that online travel companies remit to the hotel This
results in a significant profit to the online travel companies See Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 7 Table 2 (Figure 1) Figure 1 calculates state and local taxes lost on the onshy
line reservation made in [Figure 1] as a result of the current practice of Internet
intermediaries remitting tax on the discount hotel room rate instead of the actual
rate charged the customer Local governments are concerned about the loss of tax
revenues primarily tourist-related tax revenues as a result of the practice of
Internet intermediaries remitting tax on the discount hotel room rate instead of on
the actual room rent paid by the customer Id p 7
Figure 1
Advertised Room Rent $ 9900 Advertised Taxes and Fees $ 1454
Total Room Rent $11354
Estimated Discounted Rate (25) $ 7425 6 State Sales Tax 446 05 School Capital Outlay Surtax 37 5 Orange County Tourist Development Tax 371
Total Taxes 854 Total Remitted to Hotel $8279
Taxes due on Total Room Rent $ 1306
Taxes on Estimated Discount Room Rate 854
Total Tax Loss ($ 452) Profit to Expediacom From Difference in Tax $ 452 Increase in Profits Over Expediacom Room Costs 61
5
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
Section 1250104 Florida Statutes states that the tourist development tax
shall be levied at a rate of 1 percent or 2 percent of each dollar of the total
consideration charged for such lease or rental Fla Stat sect 1250104(3)(c) (2013)
(Emphasis added) The legislative intent of the statute set forth in subsection
1250104(3)(a)l identifies the act of renting leasing and letting as subject to the
Tourist Development Taxl This section of the statute is written passively to
define the transaction that is subject to the tax Aachua County v Expedia Inc
110 So 3d 941 947 (Fla 1st DCA 2013) (Padovano J dissenting) review
granted 2013 WL 5273037 (Fla 2013) It was the intent of the Legislature to tax
each and every rental for living quarters or accommodations Orange County v
Expedia Inc 985 So d 622 624 (Fla 5th DCA 2008) The statutory terms at
issue here are not limited to those operating hotels or engaged in a particular line
of business but rather apply expressly to every person who receives
Section 1250104 (3)(a)1 states It is declared to be the intent of the Legislature that every person who rents leases or lets for consideration any living quarters or accommodations in any hotel apartment hotel motel resort motel apartment apartment motel rooming house mobile home park recreational vehicle park condominium or timeshare resort for a term of 6 months or less is exercising a privilege which is subject to taxation under this section unless such person rents leases or lets for consideration any living quarters or accommodations which are exempt according to the provisions of chapter 212
6
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
consideration for room rentals County of Monroe Florida v Priceinecom Inc
2009 WL 4890664 (SD Fla Dec 17 2009)
As a whole the statute describes how the tax is to be assessed and collected
in plain and unambiguous language Several key parts of the statute reveal that the
tax is based on the total amount of money paid by the tourist not on the net
amount retained by the hotel Alachua County 110 So 3d at 947 (Padovano J
dissenting)
Section 1250104(3)(a)2a states that the tax shall be due on the
consideration paid for occupancy Here the Legislature is plainly referring to the
amount of money paid by the tourist because it is the tourist who pays
consideration for occupancy The Legislature could not have intended the terms
consideration paid for occupancy to denote the amount of money retained by the
hotel where the online travel company is not paying for occupancy but only
remitting the hotels net room rate
Another example to illustrate that the tax is based on the total amount paid
by the tourist is section 1250104(3)(c) which specifies that the Tourist
Development Tax shall be assessed at a rate of 1 percent or 2 percent of each
dollar and major fraction of each dollar of the total consideration chargedfor such
ease or rental (Emphasis added) Alachua County 110 So 3d at 947
7
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
(Padovano J dissenting) Respondents who receive consideration from tourists
for living accommodations are subject to the Tourist Development Tax
Even accepting for the sake of argument that the processing of room
reservations by online travel companies is a non-taxable service it has long been
the law in Florida that a non-taxable service that is part of a taxable sale renders
the entire transaction taxable See American Telephone and Telegraph v Florida
Department ofRevenue 764 So 2d 665 (Fla I st DCA 2000) (concluding that the
price of the engineering services were part of the sale of the equipment and
therefore the entire amount of the contract was subject to tax) The Court in Miami
Dolphins supra determined that Section 1250104 Florida Statute should be read
in para materia with the general sales tax statute Chapter 212 Florida Statutes
When the two statutes are read together the entire amount collected by the online
travel companies is subject to tax
Moreover the 2005 legislative report concluded that the practice of Internet
intermediaries remitting taxes on the discounted rate paid by the internet
intermediaries to the hotels and not the higher amounts actually paid by the
customer occupying the room is in violation of Florida law Florida Senate
Committee on Government Efficiency Appropriations Report Number 2005-131
p 27 The same is true today The Legislature had an opportunity to clarify the
terms rents leases or lets for consideration as applied to Respondents during the
8
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
2011 regular session through Senate Bill 376 and the Legislature chose not to pass
the legislation The Tourist Development Tax therefore should be remitted on the
total consideration charged for the hotel room
IL FAILURE TO TAX THE TOTAL RETAIL CHARGE UNDERMINES THE PURPOSE OF THE TOURIST DEVELOPMENT TAX BY CREATING A TAX LOOPHOLFs FOR RESPONDENTS
The Tourist Development Tax is an important source of revenue that Florida
counties use to finance infrastructure such as aquariums museums parks sports
stadiums convention centers tourist information centers and beach restoration
Fla Stat sect 1250104(5) (2013) Online travel companies have eroded the tax base
and are reaping profits at the counties expense In this time of fiscal deficiency
counties are in great need of this funding
The Center on Budget and Policy Priorities has reported
State and local governments throughout the United States are losing roughly $275 million to $400 million in revenue each year because of their failure to ensure that online travel companies collect and remit the appropriate amount of tax on hotel room bookings At a time when sharply reduced revenues are forcing states and localities to cut health care for the poor lay off teachers close fire stations and increase tuition at state universities and community colleges all of which are reducing economic growth it is counterproductive to permit a tax loophole that pads their profits at the publics expense
9
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
Michael Mazerov Center on Budget and Policy Priorities State and Local
Governments Should Close Online Hotel Tax Loophole and Collect Taxes Owed
(April 12 2011)
About 9 of the nations 4 rnillion hotel rooms are m Florida where
tourism is a $60 billion-a-year industry Florida Jumps Into Fray Over Online
Hotel Taxes Bloomberg Businessweek March 1 2011 In Florida state
economists estimate the loss of revenue to state and local governments amounts to
$20 million a year Id This is money that should be collected and utilized to
enhance tourism opportunities and improve the tourism industry in Florida which
is vital to Floridas future
IIL THE DISTRICT COURTS RULING CREATES AN UNEVEN PLAYING FIELD IN A COMPETITIVE
INDUSTRY
The hotel industry is highly competitive and the District Courts ruling
creates an uneven playing field for companies in the hotel industry The ruling has
created a discriminatory tax in favor of online travel companies by dividing the
accommodation reservation into discrete transactions Local hotels have made real
investments in Florida and should be able to compete fairly with online travel
companies Using an internet connection to make a reservation cannot by itself
determine the legal responsibility to collect and remit transient rental tax Florida
Senate Committee on Finance and Tax Issue Brief Number 2009-320 p 1 Judge
10
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
Padovano in his dissent recognized that different methods of completing the
same transactioncannot have the effect of changing the tax liability on the
transaction Aachua County 110 So 3d at 950 (Padovano J dissenting)
The online travel companies are engaging in the same room booking
services that the hotels engage in Since the hotels cannot deduct those expenses
prior to paying the Tourist Development Tax there can be no justification for
allowing the online travel companies to deduct those expenses prior to paying the
tax
Furthermore hotels pay traditional travel agents a commission after the full
amount of the room is paid by the customer upon check out Consequently the
Tourist Development Tax is paid on the entire charge for the room with no
deductions for the travel agents commission Walter Hellerstein Memorandum to
the National Conference ofState Legislature Re Travel Intermediaries July 16
2009 In contrast on-line travel companies have adopted a business model
whereby they collect payment from the guest upon booking extract their
commission and remit to the hotel the hotels portion along with taxes only on that
portion received by the hotel The mere timing of when the guest pays for the
room ie upon booking or at check out does not change the substance of this
transaction Both means of compensating a travel intermediary should be taxed in
the same manner The only way to ensure equal tax treatment of all booking
11
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
channels is for the online travel companies to pay the Tourist Development Tax on
the total amount paid by the tourists
12
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
CONCLUSION
For the forgoing reasons and those in the Initial Brief of Petitioners the
Amici respectfully request that the Court reverse the District Courts decision
Respectfully submitted this O day of October 2013
13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished by Electronic Mail this O
Robert L Nabors Esquire rnabors(alnanlawcorn
Harry F Chiles Esquire hchilesnanlawcorn legal-adminnanlawcom Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Tallahassee Florida 32308
Edward A Dion Esquire edionnenlawcom Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301
Mark E Holcomb Esquire mholcombmah-lawcom Madsen Goldman amp Holcomb Ll P 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308
day of October 2013 to the following
Roberto Martinez Esquire bobcolsoncom Maureen Lefebvre Esquire Maureencolsoncom Stephanie A Casey Esquire seasevcolsoncom auroracolsoncom Colson Hicks Eidson 255 Alhambria Circle Penthouse Coral Gables Florida 33134
Larry Smith Esquire Mary G Jolly Esquire miolleycovolusiaflus
County of Volusia 123 West Indiana Avenue DeLand Florida 32720
Darrel J Hieber Esquire Darrelheiberskaddencom Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071
14
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
CERTIFICATE OF COMPLIANCE
In compliance with Fla R App P 9210(a) the font size used in this Amici
Curiae Brief is Times New Roman size 14
15
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