Summary of Online Travel Company Taxation in Other States

This document was discussed at the May 27, 2010, meeting of interested parties studying the taxation of hotel rooms booked through online travel companies. It provides a brief overview of the states and localities that have addressed the taxability of fees imposed by online travel companies. The issue has been addressed through the courts, administratively, and by legislative enactments.

Litigation has thus far been the most popular method by which localities determine the taxability of fees imposed by online travel companies. In cities in 22 states, local officials have filed suit against online travel companies contending that the "mark-up" fees are subject to tax. Currently, the state of Florida is the only state that has filed a similar suit. These cases vary in result, with the determination ultimately turning on the specific language of the taxing statute or ordinance. Some courts have also dismissed these cases due to the locality's failure to comply with mandatory administrative tax assessment procedures prior to bringing suit against the taxpayer.

This is a working document that will be updated periodically as additional information becomes available.


SBX6 2 (2009) would create a special exemption to the pay first rule for various OTCs seeking to challenge a disputed amount of transient occupancy tax that is owed to the local jurisdictions. This bill has not passed the California legislature.
In a referendum on November 3, 2009, voters in the city of South San Francisco approved a measure that expressly makes hotels responsible for payment of the transient occupancy tax applicable to the entire amount that a guest ultimately pays for the use of a room. In response to this measure, some online entities removed South San Francisco hotels from their websites. In an Administrative Interpretation of this measure, the City Finance Director clarified that the City would apply the tax only to the net room rate, which would maintain consistency with other cities in San Mateo County. Since the Measure explicitly authorized Council to make changes as long as such changes didn't increase tax rates, acceptance of the opinion was appropriate if the Council saw fit. The City Council unanimously approved Resolution No. 1-2010, ratifying the tax administrator's administrative interpretation. v. City of Anaheim (PDF 1,328KB): Los Angeles Superior Ct. (2010). Based on language in Anaheim's ordinance, ct. determined that transient occupancy tax does not apply to the total amount paid to the OTC.

District of Columbia:

Bill 18-655 (2010) would clarify that OTCs must remit taxes on the full amount paid for accommodations in D.C. This bill has not passed DC's legislature. (D.C. Council convenes for 2-year period).


The Florida Department of Revenue has not taken an official position on whether tax is due on the amount collected and retained by internet intermediaries, nor has the Department taken a position on whether tax is due on the additional charges variously labeled as "tax reimbursements," "tax recovery charges," or "taxes and fees."

HB 1241 (2010): Would clarify that tax is due only on the wholesale accommodations price. Passed Florida House (75 Y, 34N). Died in Senate Messages Committee, April 30, 2010.

HB 335 (2010): Would require OTCs to collect tax on the full amount paid by customers. (Died in House Finance & Tax Council Committee, April 30, 2010).
State of Florida, Office of Attorney General v. Expedia, Inc., Orbitz, LLC, and Orbitz, Inc.: In November, 2009, Florida Attorney General Bill McCollum brought a suit for declaratory judgment against Expedia and Orbitz, contending that these companies failed to pay the proper amount of state tax on hotel room rentals. Florida is the first state to file such a lawsuit.

Brevard County v. U.S. District Ct. (2010) (PDF 60KB): Motion to dismiss denied, based on county ordinance, which imposed tax on the total consideration charged to lessors, and required that the tax be charged by the person receiving the consideration.


Expedia Inc. v. City of Columbus: Supreme Ct. of GA (2009) (PDF 123KB): Ct. ruled that the OTC's facilitation fee was subject to the occupancy tax, based on the language of the ordinance, which provided for an excise tax at the applicable rate on the lodging charges actually collected. v. City of Columbus: Supreme Ct. of GA (2009) (PDF 37KB): Same ruling as above.

City of Rome, Georgia v. U.S. District Ct. (2007) (PDF 164KB): Ct. found that, based on Georgia law, the plaintiffs were required to first estimate, assess, and attempt to collect the excise taxes at issue from the defendants before pursuing litigation alleging that the defendants violated Georgia's Excise Tax Act. Ct. stayed the case pending the city's exhaustion of administrative remedies.

City of Atlanta v., L.P. et. al: Supreme Court of GA (March 23, 2009) (PDF 101KB): Atlanta filed suit in 2006 against 17 OTC's. A Fulton County judge and the GA Ct. of Appeals granted OTC's motion to dismiss on the grounds that the city was required to first exhaust its administrative remedies before pursuing litigation. GA Supreme Ct. overturned this decision, holding that the city's failure to exhaust administrative remedies did not preclude adjudication of the claim for declaratory judgment as to threshold legal issues regarding the applicability of hotel tax ordinance. Ct. vacated ct. of appeals judgment and directed the trial ct. to adjudicate City's claim for declaratory judgment as to the applicability of the hotel tax ordinance.


City of Fairview Heights v. Orbitz: U.S. District Ct. (2006) (PDF 85KB): Motion to dismiss denied. City ordinance imposed a duty on owner of every hotel or motel to collect the tax and defined "owner" to include any person receiving consideration for the rental of a hotel room.


Louisville/Jefferson County v. U.S. Ct. of Appeals (2009) (PDF 101KB): Motion to dismiss granted. OTCs do not physically control or furnish the rooms they advertise, as required by the ordinance.


H.F. 3687 would clarify that the Minnesota sales tax applies to the full price that an online or similar travel service charges for Minnesota hotel rooms. The bill failed to make it out of the House policy committees.


House Bill 1442 would remove the amount charged by a travel agent or an intermediary from all hotel or motel local transient guest taxes or local occupancy taxes. The bill was delivered to the Governor on May 25, 2010 and is awaiting the Governor's approval.

New Mexico

City of Gallup v. U.S. District Ct. (2007) (PDF 23KB): Motion to dismiss denied. Ct. determined that OTCs are not hotel operators under the City's Lodger's Tax Ordinance; therefore, the tax is imposed on the amount paid to the hotel operators. The ct. held that the OTCs did not collect tax over and above what was remitted to the hotel operators.

New York

Local Law 43 (2009), New York City ordinance requires third party intermediaries to collect and remit hotel tax based on the total amount charged to the customer, including any service/reservation fees, on and after September 1, 2009. Several OTCs have filed a lawsuit contending that Local Law 43 violates the state constitution because it exceeds the scope of the enabling legislation that allows New York City to impose a hotel tax.

North Carolina

SB 897 (2010) (at page 159): North Carolina has incorporated language into its budget indicating that facilitation fees and similar fees are considered charges necessary to complete the rental of the accommodation and are included in the sales price, and that a person authorized to facilitate the rental of an accommodation is included under the definition of a retailer.

Pitt County v. U.S. Ct. of Appeals (2009) (PDF 51KB): Based on Pitt County's ordinance, OTCs do not meet the definition of ‘retailer' because they are not businesses of a type similar to hotels, motels, tourist homes, or tourist camps.

Wake County v. Superior Ct. of N.C. (2007) (PDF 135KB): Motion to dismiss denied, based on the language of the ordinance, requiring these entities to collect the tax.


City of Findlay v. U.S. District Ct. In two cases the court held that the ordinances of Findlay and several other localities imposed no duty for intermediaries to collect the tax. 2006 opinion (PDF 155KB); 2008 opinion (PDF 60KB)


On February 19, 2010, the Philadelphia Tax Review Board issued a written determination that Expedia, Inc. does not meet the definition of an "operator" under the Philadelphia Code.

South Carolina

City of Charleston v. (PDF 97KB): U.S. District Ct. (2008): Motion to dismiss denied, where tax was imposed on those engaged in furnishing accommodations to transients because defendants received money in exchange for "supplying" hotel rooms. Folder
Travelscape v. South Carolina Dept. of Revenue: SC Admin. Law Ct. (2009): Based on the ct's determination that the OTCs were in the business of furnishing rooms, as required by the statute, ct. ruled that the facilitation fee was subject to tax.


City of Orange v. U.S. District Ct. (2007) (PDF 83KB): Motion to dismiss granted. The ordinance imposing the occupancy tax clearly imposed a tax on the consideration paid to a hotel or motel, and OTCs were not included in this class.

City of San Antonio v. U.S. District Ct. (2007) (PDF 53KB): (174 Texas cities represented in this class action suit)--Motion to dismiss denied. Occupancy tax was levied on any person or entity owning, operating, managing, or controlling any hotel and plaintiff alleged defendants had a right to control occupancy as a result of their contracts with hotel.

Return to the Study of Online Travel Companies.


Last Updated 10/19/2015 15:45