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Broward, Other Counties See Setback In Judge’s Hotel Tax Ruling

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(Source: CBS4)

(Source: CBS4)

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TALLAHASSEE (CBSMiami) – Broward county and other Florida companies who were hoping for a windfall in hotel taxes from online travel companies may be out a luck. A judge in Tallahassee has ruled that while the companies owe the counties taxes. they must be based on their discounted rates, meaning government will get less.

After hearing arguments last month, Circuit Judge Terry Lewis ruled that the online travel sites only owe local hotel taxes on the discounted amounts they actually pay for rooms, not the marked up rates that travelers pay.

His ruling rejected claims by Broward County officials that the travel websites should pay local tourist development taxes on the higher price they charge their online customers.

The ruling joins others in a growing list of opinions favoring online travel companies.

“The primary problem for the county is that … the tax is on the privilege of renting out rooms,” Lewis said in a written opinion. “It is, in essence, a tax on the hotelier for the privilege of engaging in that business. The OTCs are not hoteliers and do not engage in that business.”

Local governments like Broward County have sought to collect millions more from online travel companies, arguing that the tax is on the full cost of the room paid for by the hotel guest, an amount that is marked up by middleman websites.

Last month, an Orange County circuit judge made a similar ruling, but said the issue is ultimately a matter for lawmakers not the courts. Lawmakers have considered clarifying legislation for several years, but haven’t passed a bill.

In another case, Leon County Circuit Judge James Shelfer in April ruled in favor of the online-travel industry, saying state lawmakers had not made clear that the companies are required to pay the disputed taxes.

Attorneys for the 17 counties in that lawsuit have appealed Shelfer’s ruling to the 1st District Court of Appeal.

Lewis’ ruling comes nearly three weeks after he heard six hours of testimony from attorneys representing the county, Orbitz and others.

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