Post on 11-Jun-2020
Electronically Filed 10172013 121233 PM ET
RECEIVED 10172013 121339 Thomas D Hall Clerk Supreme Court
IN THE SUPREME COURT OF FLORIDA
ALACHUA COUNTY et al
Petitioners CASE NO SC13-838 DCA Case No 1D12-2421
v LT Case No 2009-CA-4319
EXPEDIA INC et al
Respondents ________________________
ON PETITION FOR DISCRETIONARY REVIEW OF A DECISION OF THE DISTRICT COURT OF APPEAL OF FLORIDA FIRST DISTRICT
AMICUS CURIAE BRIEF OF FLORIDA ASSOCIATION OF COUNTIES INC
IN SUPPORT OF PETITIONERS
VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
Attorney for Amicus Curiae Florida Association of Counties Inc
TABLE OF CONTENTS
Page No
TABLE OF CITATIONSii
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE 1
SUMMARY OF ARGUMENT2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES 3
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES 7
IIIWHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES 13
CONCLUSION 20
CERTIFICATE OF SERVICE21
CERTIFICATE OF COMPLIANCE 22
i
TABLE OF CITATIONS
Page No
Cases
Alachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013)16 19
Broward County v Fairfield Resorts Inc 946 So 2d 1144 (Fla 4th DCA 2006) 15
City of Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012)12
City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS 126818 (DNM July 7 2009) 12
City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston 14th Dist 2011)12
City of Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct 2012)12
City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug 27 2012) 8
Expedia Inc v City of Columbus 681 SE2d 122 (Ga 2009) 10
Fla Birth-Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d 992 (Fla 2010) 14
Fla Deprsquot of Revenue v Fla Mun Power Agency 789 So 2d 320 (Fla 2001) 13
Hotelscom LP v City of Columbus 686 SE2d 91 (Ga 2009) 10
ii
Travelscape LLC v South Carolina Department of Revenue 705 SE2d 28 (SC 2011)9 10
Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231 (ND Ill Oct 14 2011) 10 11
Florida Statutes
Section 1250104 passim
Section 1250104(2)(b)214
Section 1250104(3) 6
Section 1250104(3)(a)1 14
Section 1250104(3)(a)2a 14 17
Section 1250104(3)(c) 3
Section 1250104(3)(e) 16
Section 1250104(3)(f) 14
Section 1250104(3)(g)15
Section 21203 2 6 19
Section 21203(1) 6 15 16
Section 21203(1)(a) 15
Section 21203(1)(b)117
Section 21203(2) 6 15
Section 21203(8) - (10) 6
Section 216133 5
Section 216136 5
Other Authorities
Columbus Code of Ordinances section 19-111 10
iii
Dallas Code of Ordinances Article V section 44-35(b)8
House Bill 1241 (2010)Senate Bill 2436 (2010)6
House Bill 1393 (2012) 6
Leon County Code of Ordinances Article III section 11-46(a)(1) 13
Official Code of Georgia Annotated section 48-13-51 (a)(1)(B)(i) 10
Rosemont Code of Ordinances section 10-22 11
Rosemont Code of Ordinances section 10-23(a)11
Rosemont Code of Ordinances sections 10-23(b)-(c) 11
San Antonio Code of Ordinances Article IV section 31-68(b) 8
Senate Bill 156 (2010)House Bill 335 (2010)6
South Carolina Code Annotated section 12-36-920(A) 9
South Carolina Code Annotated section 12-36-920(E)9
The American Heritage College Dictionary Fourth Edition 17
iv
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE
The Florida Association of Counties (FAC) is a statewide association of
Florida counties organized as a not-for-profit corporation for the purpose of
representing county government in the State Among the express purposes for
which FAC was organized is to defend the rights of county government under
any constitutional provision (and) statute The vast majority of Floridas 67
counties have exercised their option to impose a tourist development tax pursuant
to section 1250104 Florida Statutes The aggregate proceeds of the tax received
by all Florida counties during the last county fiscal year was in the tens of millions
of dollars FACs member counties are thereby deprived of a substantial amount of
statutorily authorized tax revenue as a consequence of the tax liability position
taken by the Travel Companies1 in their interpretation of section 1250104 FACs
participation as an amicus curiae will provide the Court with an analysis of these
unpaid taxes and of court decisions in other states with less favorable statutory
authorizations
SUMMARY OF ARGUMENT
Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies
1
1
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
TABLE OF CONTENTS
Page No
TABLE OF CITATIONSii
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE 1
SUMMARY OF ARGUMENT2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES 3
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES 7
IIIWHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES 13
CONCLUSION 20
CERTIFICATE OF SERVICE21
CERTIFICATE OF COMPLIANCE 22
i
TABLE OF CITATIONS
Page No
Cases
Alachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013)16 19
Broward County v Fairfield Resorts Inc 946 So 2d 1144 (Fla 4th DCA 2006) 15
City of Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012)12
City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS 126818 (DNM July 7 2009) 12
City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston 14th Dist 2011)12
City of Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct 2012)12
City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug 27 2012) 8
Expedia Inc v City of Columbus 681 SE2d 122 (Ga 2009) 10
Fla Birth-Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d 992 (Fla 2010) 14
Fla Deprsquot of Revenue v Fla Mun Power Agency 789 So 2d 320 (Fla 2001) 13
Hotelscom LP v City of Columbus 686 SE2d 91 (Ga 2009) 10
ii
Travelscape LLC v South Carolina Department of Revenue 705 SE2d 28 (SC 2011)9 10
Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231 (ND Ill Oct 14 2011) 10 11
Florida Statutes
Section 1250104 passim
Section 1250104(2)(b)214
Section 1250104(3) 6
Section 1250104(3)(a)1 14
Section 1250104(3)(a)2a 14 17
Section 1250104(3)(c) 3
Section 1250104(3)(e) 16
Section 1250104(3)(f) 14
Section 1250104(3)(g)15
Section 21203 2 6 19
Section 21203(1) 6 15 16
Section 21203(1)(a) 15
Section 21203(1)(b)117
Section 21203(2) 6 15
Section 21203(8) - (10) 6
Section 216133 5
Section 216136 5
Other Authorities
Columbus Code of Ordinances section 19-111 10
iii
Dallas Code of Ordinances Article V section 44-35(b)8
House Bill 1241 (2010)Senate Bill 2436 (2010)6
House Bill 1393 (2012) 6
Leon County Code of Ordinances Article III section 11-46(a)(1) 13
Official Code of Georgia Annotated section 48-13-51 (a)(1)(B)(i) 10
Rosemont Code of Ordinances section 10-22 11
Rosemont Code of Ordinances section 10-23(a)11
Rosemont Code of Ordinances sections 10-23(b)-(c) 11
San Antonio Code of Ordinances Article IV section 31-68(b) 8
Senate Bill 156 (2010)House Bill 335 (2010)6
South Carolina Code Annotated section 12-36-920(A) 9
South Carolina Code Annotated section 12-36-920(E)9
The American Heritage College Dictionary Fourth Edition 17
iv
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE
The Florida Association of Counties (FAC) is a statewide association of
Florida counties organized as a not-for-profit corporation for the purpose of
representing county government in the State Among the express purposes for
which FAC was organized is to defend the rights of county government under
any constitutional provision (and) statute The vast majority of Floridas 67
counties have exercised their option to impose a tourist development tax pursuant
to section 1250104 Florida Statutes The aggregate proceeds of the tax received
by all Florida counties during the last county fiscal year was in the tens of millions
of dollars FACs member counties are thereby deprived of a substantial amount of
statutorily authorized tax revenue as a consequence of the tax liability position
taken by the Travel Companies1 in their interpretation of section 1250104 FACs
participation as an amicus curiae will provide the Court with an analysis of these
unpaid taxes and of court decisions in other states with less favorable statutory
authorizations
SUMMARY OF ARGUMENT
Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies
1
1
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
TABLE OF CITATIONS
Page No
Cases
Alachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013)16 19
Broward County v Fairfield Resorts Inc 946 So 2d 1144 (Fla 4th DCA 2006) 15
City of Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012)12
City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS 126818 (DNM July 7 2009) 12
City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston 14th Dist 2011)12
City of Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct 2012)12
City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug 27 2012) 8
Expedia Inc v City of Columbus 681 SE2d 122 (Ga 2009) 10
Fla Birth-Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d 992 (Fla 2010) 14
Fla Deprsquot of Revenue v Fla Mun Power Agency 789 So 2d 320 (Fla 2001) 13
Hotelscom LP v City of Columbus 686 SE2d 91 (Ga 2009) 10
ii
Travelscape LLC v South Carolina Department of Revenue 705 SE2d 28 (SC 2011)9 10
Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231 (ND Ill Oct 14 2011) 10 11
Florida Statutes
Section 1250104 passim
Section 1250104(2)(b)214
Section 1250104(3) 6
Section 1250104(3)(a)1 14
Section 1250104(3)(a)2a 14 17
Section 1250104(3)(c) 3
Section 1250104(3)(e) 16
Section 1250104(3)(f) 14
Section 1250104(3)(g)15
Section 21203 2 6 19
Section 21203(1) 6 15 16
Section 21203(1)(a) 15
Section 21203(1)(b)117
Section 21203(2) 6 15
Section 21203(8) - (10) 6
Section 216133 5
Section 216136 5
Other Authorities
Columbus Code of Ordinances section 19-111 10
iii
Dallas Code of Ordinances Article V section 44-35(b)8
House Bill 1241 (2010)Senate Bill 2436 (2010)6
House Bill 1393 (2012) 6
Leon County Code of Ordinances Article III section 11-46(a)(1) 13
Official Code of Georgia Annotated section 48-13-51 (a)(1)(B)(i) 10
Rosemont Code of Ordinances section 10-22 11
Rosemont Code of Ordinances section 10-23(a)11
Rosemont Code of Ordinances sections 10-23(b)-(c) 11
San Antonio Code of Ordinances Article IV section 31-68(b) 8
Senate Bill 156 (2010)House Bill 335 (2010)6
South Carolina Code Annotated section 12-36-920(A) 9
South Carolina Code Annotated section 12-36-920(E)9
The American Heritage College Dictionary Fourth Edition 17
iv
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE
The Florida Association of Counties (FAC) is a statewide association of
Florida counties organized as a not-for-profit corporation for the purpose of
representing county government in the State Among the express purposes for
which FAC was organized is to defend the rights of county government under
any constitutional provision (and) statute The vast majority of Floridas 67
counties have exercised their option to impose a tourist development tax pursuant
to section 1250104 Florida Statutes The aggregate proceeds of the tax received
by all Florida counties during the last county fiscal year was in the tens of millions
of dollars FACs member counties are thereby deprived of a substantial amount of
statutorily authorized tax revenue as a consequence of the tax liability position
taken by the Travel Companies1 in their interpretation of section 1250104 FACs
participation as an amicus curiae will provide the Court with an analysis of these
unpaid taxes and of court decisions in other states with less favorable statutory
authorizations
SUMMARY OF ARGUMENT
Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies
1
1
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
Travelscape LLC v South Carolina Department of Revenue 705 SE2d 28 (SC 2011)9 10
Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231 (ND Ill Oct 14 2011) 10 11
Florida Statutes
Section 1250104 passim
Section 1250104(2)(b)214
Section 1250104(3) 6
Section 1250104(3)(a)1 14
Section 1250104(3)(a)2a 14 17
Section 1250104(3)(c) 3
Section 1250104(3)(e) 16
Section 1250104(3)(f) 14
Section 1250104(3)(g)15
Section 21203 2 6 19
Section 21203(1) 6 15 16
Section 21203(1)(a) 15
Section 21203(1)(b)117
Section 21203(2) 6 15
Section 21203(8) - (10) 6
Section 216133 5
Section 216136 5
Other Authorities
Columbus Code of Ordinances section 19-111 10
iii
Dallas Code of Ordinances Article V section 44-35(b)8
House Bill 1241 (2010)Senate Bill 2436 (2010)6
House Bill 1393 (2012) 6
Leon County Code of Ordinances Article III section 11-46(a)(1) 13
Official Code of Georgia Annotated section 48-13-51 (a)(1)(B)(i) 10
Rosemont Code of Ordinances section 10-22 11
Rosemont Code of Ordinances section 10-23(a)11
Rosemont Code of Ordinances sections 10-23(b)-(c) 11
San Antonio Code of Ordinances Article IV section 31-68(b) 8
Senate Bill 156 (2010)House Bill 335 (2010)6
South Carolina Code Annotated section 12-36-920(A) 9
South Carolina Code Annotated section 12-36-920(E)9
The American Heritage College Dictionary Fourth Edition 17
iv
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE
The Florida Association of Counties (FAC) is a statewide association of
Florida counties organized as a not-for-profit corporation for the purpose of
representing county government in the State Among the express purposes for
which FAC was organized is to defend the rights of county government under
any constitutional provision (and) statute The vast majority of Floridas 67
counties have exercised their option to impose a tourist development tax pursuant
to section 1250104 Florida Statutes The aggregate proceeds of the tax received
by all Florida counties during the last county fiscal year was in the tens of millions
of dollars FACs member counties are thereby deprived of a substantial amount of
statutorily authorized tax revenue as a consequence of the tax liability position
taken by the Travel Companies1 in their interpretation of section 1250104 FACs
participation as an amicus curiae will provide the Court with an analysis of these
unpaid taxes and of court decisions in other states with less favorable statutory
authorizations
SUMMARY OF ARGUMENT
Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies
1
1
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
Dallas Code of Ordinances Article V section 44-35(b)8
House Bill 1241 (2010)Senate Bill 2436 (2010)6
House Bill 1393 (2012) 6
Leon County Code of Ordinances Article III section 11-46(a)(1) 13
Official Code of Georgia Annotated section 48-13-51 (a)(1)(B)(i) 10
Rosemont Code of Ordinances section 10-22 11
Rosemont Code of Ordinances section 10-23(a)11
Rosemont Code of Ordinances sections 10-23(b)-(c) 11
San Antonio Code of Ordinances Article IV section 31-68(b) 8
Senate Bill 156 (2010)House Bill 335 (2010)6
South Carolina Code Annotated section 12-36-920(A) 9
South Carolina Code Annotated section 12-36-920(E)9
The American Heritage College Dictionary Fourth Edition 17
iv
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE
The Florida Association of Counties (FAC) is a statewide association of
Florida counties organized as a not-for-profit corporation for the purpose of
representing county government in the State Among the express purposes for
which FAC was organized is to defend the rights of county government under
any constitutional provision (and) statute The vast majority of Floridas 67
counties have exercised their option to impose a tourist development tax pursuant
to section 1250104 Florida Statutes The aggregate proceeds of the tax received
by all Florida counties during the last county fiscal year was in the tens of millions
of dollars FACs member counties are thereby deprived of a substantial amount of
statutorily authorized tax revenue as a consequence of the tax liability position
taken by the Travel Companies1 in their interpretation of section 1250104 FACs
participation as an amicus curiae will provide the Court with an analysis of these
unpaid taxes and of court decisions in other states with less favorable statutory
authorizations
SUMMARY OF ARGUMENT
Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies
1
1
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE
The Florida Association of Counties (FAC) is a statewide association of
Florida counties organized as a not-for-profit corporation for the purpose of
representing county government in the State Among the express purposes for
which FAC was organized is to defend the rights of county government under
any constitutional provision (and) statute The vast majority of Floridas 67
counties have exercised their option to impose a tourist development tax pursuant
to section 1250104 Florida Statutes The aggregate proceeds of the tax received
by all Florida counties during the last county fiscal year was in the tens of millions
of dollars FACs member counties are thereby deprived of a substantial amount of
statutorily authorized tax revenue as a consequence of the tax liability position
taken by the Travel Companies1 in their interpretation of section 1250104 FACs
participation as an amicus curiae will provide the Court with an analysis of these
unpaid taxes and of court decisions in other states with less favorable statutory
authorizations
SUMMARY OF ARGUMENT
Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies
1
1
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
By use of the merchant model the Travel Companies evade taxation on the
total consideration received for the rental of hotel rooms in the State of Florida As
a result those Florida counties which impose the tourist development tax pursuant
to the provisions of section 1250104 Florida Statutes as well as the State of
Florida have lost millions of tax dollars which could have been utilized for
appropriate tourist promotional activities
Courts across the country have determined that the Travel Companies are
liable for similar taxes on the total consideration they receive from their customers
for hotel room reservations and have specifically ruled that one does not have to be
an operator vendor or an actual hotel to be responsible for the collection and
remittance of occupancy taxes on that total consideration
Even though the privilege taxed under section 1250104 Florida Statutes is
separate and distinct from the taxable privilege established in section 21203
Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes
under the merchant model are the same under either statute That is they are
responsible for collecting and remitting taxes on the total consideration paid
ARGUMENT
2
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES
Section 1250104(3)(c) Florida Statutes provides [t]he tourist development
tax shall be levied imposed and set by the governing board of the county at a rate
of 1 percent or 2 percent of each dollar and major fraction of each dollar of the
total consideration charged for such lease or rental (Emphasis added) The
practice of collecting tourist development taxes only on a portion of the
consideration paid by the person reserving the hotel room under the ldquomerchant
modelrdquo used by the Travel Companies results in the loss of millions of dollars in
tax revenue across the State
Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the
right to broker or facilitate the reservation of hotel rooms at a discount or
wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer
the rooms for sale to the public on their websites (R at 5747 5811) When a
customer purchases a hotel room reservation from a Travel Company the Travel
Company charges the customer an amount that is greater than the wholesale rate
Id This marked-up amount is advertised as the room rate (R at 5747-48
8391-92) Although the Travel Companies state that the room rate is a
2 Reference to materials in the record will be designated as R followed by the appropriate page number
3
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
combination of the wholesale rate and their facilitation fees they do not
disclose to the public which portion of the room rate is for their facilitation fee
(R at 7477 8391-92 8619) At the end of the transaction the customer pays the
Travel Company directly a total amount that equals the room rate plus taxes and
service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo
and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A
reservation will not be made until the entire amount is charged to the customers
credit card Id
Upon checking into the hotel the customer does not pay the hotel any
money to occupy the room or any fees or taxes but merely provides a credit card
for incidentals (R at 5962) After the customer has completed hisher stay the
hotel is required to send the Travel Companies an invoice for the wholesale rate
and the occupancy taxes based upon that wholesale rate (R at 7564) Under this
model the tourist development tax is calculated on the wholesale rate the Travel
Companies negotiate with the hotels and not the total amount they charge their
customers for the room reservation (R at 9155 56) The Travel Companies retain
whatever they have collected in excess of the amount remitted to the hotel Id If
the hotel fails to submit an invoice in the time period designated by the contract
the Travel Companies retain all monies collected from the consumer including any
amount purportedly collected for taxes (R 7564)
4
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
Under the merchant model the total consideration charged for such lease or
rental is the amount the Travel Companies charge their customers credit card for
the room reservation By collecting and remitting the tourist development tax on
only the wholesale rate agreed to with the hotels the Travel Companies are
evading taxation in violation of the clear and unambiguous language of the statute
Since the commencement of this litigation several bills have been filed in
the Florida Legislature relating to the statutory obligation of the Travel Companies
to collect and remit state and local taxes on the total consideration they charge and
collect their customers for hotel rooms in Florida The impact consensus estimates
adopted by the Revenue Estimating Conference for these proposed bills reveal the
extent of the uncollected revenues under the merchant model used by the Travel
Companies3
In 2010 the Revenue Estimating Conference analyzed Senate Bill
156House Bill 335 which would have created section 21203(8) through (10)
Florida Statutes to provide the that term engaging in the business of renting
3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm
5
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
leasing letting or granting a license to use transient rental accommodations
includes the activities conducted by the Travel Companies The bills would also
have granted the Travel Companies a tax amnesty period for unpaid taxes and any
applicable penalty or interest which the Revenue Estimating Conference estimated
would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)
Also in 2010 the Revenue Estimating Conference analyzed House Bill
1241Senate Bill 2436 which would have amended both sections 1250104(3) and
21203(1) and (2) Florida Statutes to provide that payments received by the
Travel Companies for facilitating the reservation of hotels rooms were not included
in the term consideration The Revenue Estimating Conference determined that
the impact to Floridas Counties due to these proposed amendments was $227
million dollars (App 3-1)
In 2012 House Bill 1393 was filed and sought to amend sections 1250104
and 21203 Florida Statutes in a similar fashion to the amendments proposed by
HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its
adopted consensus estimate
[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity
6
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table
Id The table referenced above by the Revenue Estimating Conference showed that
the impact on the tourist development tax was $320 million for FY 2012-13 $366
million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)
As recognized by the Revenue Estimating Conference the Travel
Companies failure to pay taxes on the total consideration they receive from their
customers for reservation of hotel rooms in Florida has deprived and continues to
deprive the State of Florida and its Counties of statutorily authorized tax revenues
II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES
State and federal courts across the country have determined that the Travel
Companies are liable for the payment of tourist or occupancy taxes on the total
consideration they receive under the merchant model and have rejected the Travel
Companies efforts to misrepresent the nature of the transaction in order to evade
their liability In many of these cases the enabling statutes or the authorizing
ordinances at issue contain provisions which are less favorable for imposing tax
liability on the total consideration received by the Travel Companies from the
7
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
person making the reservation than those contained in section 1250104 Florida
Statutes
In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD
Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug
27 2012) the court was required to interpret two separate types of ordinances
which imposed occupation taxes on hotel stays The San Antonio ordinances state
that the tax rate shall be equal to a certain percentage of the total price paid by
the occupant for the right to occupy a sleeping room See San Antonio Code of
Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the
tax rate shall be a certain percentage of the consideration paid by the occupant of
the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The
Travel Companies argued that only the amounts paid to the hotel could be taxed
and because the customer or occupant of the room in a merchant model transaction
never pays the hotel the total retail price can never be taxed City of San Antonio
2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held
that the consideration paid by the occupant of the room will always be the total
retail price that the customer pays for the right of occupancy Id at 66
In South Carolina the states enabling statute imposes an Accommodations
Tax on every person engaged or continuing within this State in the business of
furnishing accommodations to transients for consideration SC Code Ann sect 12-
8
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
36-920(E) The application of this statute to the Travel Companies was considered
by the Supreme Court of South Carolina in Travelscape LLC v South Carolina
Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was
not subject to the tax because it is not engaged in the business of furnishing
accommodations The court rejected this argument and found the context of
furnish as it appears [in the law] demonstrates that it encompasses the activities of
entities such as Travelscape who whether directly or indirectly provide hotel
reservations to transients for consideration Travelscape LLC 705 SE2d at 34
The court also determined that the legislature intended to levy the tax not merely
on those physically providing sleeping accommodations but on those entities who
were accepting money in exchange for supplying hotel rooms Id at 35
On the issue of the amount subject to the tax section 12-36-920(A) of the
South Carolina Code provides it is the gross proceeds derived from the rental or
charge for any rooms lodgings or sleeping accommodations furnished to
transients by any place in which rooms lodgings or sleeping accommodations
are furnished to transients for consideration In interpreting this provision the
court concluded that the controlling statute imposes a sales tax on the gross
proceeds received by Travelscape in exchange for furnishing hotel
accommodations in South Carolina Id at 39
9
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
In Georgia the relevant enabling act provides for municipalities to impose
an excise tax at the applicable rate on the lodging charges actually collected See
OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which
imposes
[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article
Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel
Companies to collect the hotel occupancy tax based upon the total amount they
disclosed to the customer as the room rate room charge or other comparable term
even though as in Florida the companies argued that it should be based on the
wholesale price paid to the hotels See Expedia Inc v City of Columbus 681
SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga
2009)
In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231
(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in
favor of the village in its action alleging that the Travel Companies failed to pay
the full amount of hotel tax due The villages ordinance imposed a tax upon the
privilege of renting a hotel or motel room within the Village of Rosemont at a rate
of 7 of the room rental rate but not on taxes or other non-room rental charges
10
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid
for by the rentor it is the duty of the owner of every hotel to secure the tax from
the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)
Owner is defined under the Ordinance as any person (a) having an ownership
interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the
consideration for the rental of such hotel or motel room sect 10-22 In reviewing the
elements of the merchant model the court held [b]ecause the customer cannot
access his hotel room unless and until he pays the OTCs entire charge the Travel
Companies are owners who receive consideration for rental[s] within the
meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231
at 8-9 The court went on to hold that defendants fees and markups are part of the
rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue
of damages
In response the Travel Companies are likely to cite to cases in which courts
have determined that they were not liable for similar taxes Yet in all such cases
the enabling statutes or the ordinances themselves impose the tax on vendors
operators or hotels and these terms were defined in the statutes or ordinances
to mean one who was a person who owns or operates the hotel the proprietor of
the hotel or every establishment kept used maintained or held out to the public
to be a place where sleeping accommodations are offered to guests See City of
11
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of
Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct
2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS
126818 (DNM July 7 2009) Clearly none of these cases apply in the instant
case because neither the state enabling statute nor the relevant ordinances contain
the same limiting words
In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston
14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid
to the hotel on the occupants behalf for the right to use a room ordinarily used for
sleeping The court held that only the amount paid by the Travel Companies to the
hotels and not the amount paid by a customer to the Travel Company was subject
to the tax Id at 714 However unlike the City of Houstons ordinance cited above
Floridas enabling statute and the counties ordinances at issue do not limit the
application of the tax only to the amount paid to the hotel Instead Floridas
enabling statute imposes the tax on the consideration paid for occupancy without
specifying that the consideration must be paid specifically to a hotel
Similarly Leon Countys ordinance levies a tourist development tax at the
rate of five percent of each dollar of the total rental andor consideration
charged every person who rents leases or lets any living quarters or
accommodations See Leon County Code of Ordinances Art III sect 11-
12
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
46(a)(1) The ordinance like the statute does not specifically require that the
consideration be paid to a hotel for the tax to apply
The language of both Floridas enabling statute and the counties ordinances
is clear and unambiguous The Travel Companies are not the occupants of the hotel
rooms and have no right to occupancy Therefore the wholesale amount the
hotels receive from the Travel Companies is not the total amount received for
occupancy and is not the subject of the tax The tax is clearly intended to be
imposed on the total amount of consideration received by the Travel Companies
from persons who reserve accommodations on the companies websites
III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES
Words matter in statutory construction A courts function is to interpret
statutes as they are written and give effect to each word in the statute Fla Deprsquot
of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)
Statutory interpretation begins with the plain meaning of the statute Fla Birth-
Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d
992 997 (Fla 2010)
13
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
The following words are used by the Legislature in its authorization of the
local option tourist development tax for counties in section 1250104 Florida
Statutes
Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)
sect 1250104(2)(b)2 Fla Stat
[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation
sect 1250104(3)(a)1 Fla Stat
Tax shall be due on the consideration paid for occupancy in the county
sect 1250104(3)(a)2a Fla Stat
The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental
sect 1250104(3)(f) Fla Stat (emphasis added)
The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue
sect 1250104(3)(g) Fla Stat (emphasis added)
14
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
In contrast to the tourist development tax set forth above the following
words are those chosen by the Legislature to describe its imposition of the separate
state sales tax on transient rentals in section 21203(1) Florida Statutes
[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel
sect 21203(1)(a) Fla Stat (emphasis added)
For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental
sect 21203(1)(a) Fla Stat (emphasis added)
[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment
sect 21203(2) Fla Stat (emphasis added)
The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter
sect 21203(2) Fla Stat (emphasis added)
As determined by the Fourth District Court of Appeal in Broward County v
Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section
21203(1) Florida Statutes regulates the imposition and administration of the
15
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
transient rentals tax and is inapplicable to analyzing the county tourist
development tax at issue here4 Section 1250104 Florida Statutes does not have
the same requirement that the person engage ldquoin the business of renting leasing
letting or granting a license found in section 21203(1) Florida Statutes
Additionally as correctly noted by Judge Padovano in his dissent in Alachua
County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)
Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel
(App 1)
As shown above there are two different privileges being taxed by these two
statutes However the Travel Companiesrsquo tax liability and duty to collect under the
merchant model to facilitate hotel reservations in the counties of this State are
identical Both statutes provide that the [t]ax shall be due on the consideration
4 See also section 1250104(3)(e) Florida Statutes that
The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease
16
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither
consideration nor occupancy is defined in either Chapter Consideration is
defined in The American Heritage College Dictionary Fourth Edition as
something promised given or done that has the effect of making an agreement a
legally enforceable contract Occupancy is defined therein as the period during
which one owns rents or uses certain premises or land In the context of the
merchant model transactions at issue the consideration is the total amount charged
to the customers credit card in exchange for the right to occupy a room sometime
in the future That amount includes the room rate plus taxes and service fees
The Travel Companies will not facilitate the hotel reservation unless that total
amount is paid
Neither statute refers to the wholesale price paid for the right to facilitate a
reservation and it is impossible to construe either of the statutes as imposing a tax
on wholesale amounts paid by non-occupants for the right to facilitate a
reservation rather than occupy a hotel room Therefore the plain language of both
statutes requires the tax be paid on the total retail price that must be paid by the
customer for the right to occupy the hotel room
Similarly both statutes require that the tax be charged to the customer at the
time of payment of the consideration for the rental and remitted to the applicable
tax authority by the person receiving the consideration for the rental Clearly
17
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
under the merchant model the Travel Companies are the person receiving the
consideration for the rental and are therefore responsible for remitting the tax to
either the Department of Revenue or the county tax collector Additionally by
contracting with the hotels to collect the taxes from their (the Travel Companies)
customers the Travel Companies are the entities receiving the consideration for
the rentals
In view of the foregoing the plain language of the statutes require that the
tourist development tax as well as the transient rentals tax be collected on the
total amount charged to a customers credit card for the right to occupy a hotel
room and not the wholesale rate remitted by the Travel Companies to the hotel
By utilizing the merchant model to facilitate hotel reservations in the counties of
this state the Travel Companies are the person receiving the consideration for the
rental of the hotel room and are liable to collect and remit the tax on that total
amount
The plain meaning of the words chosen by the Legislature in section
1250104 Florida Statutes serves as the foundation for the following conclusion
drawn by Judge Padovano in his dissent
The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the
18
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute
Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano
discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the
consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal
considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe
tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge
Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or
unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel
The matter is no more complicated than thatrdquo Id at 949-50
The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a
Florida hotel room and not the privilege of owning or operating a hotel under the
statutory plain language The Travel Companiesrsquo construction of sections
1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to
avoid tax liability on the total amount of consideration received by the customer
for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be
condoned by this Court
CONCLUSION
The Travel Companies merchant model does not relieve them of the duty to
collect and remit the tourist development tax pursuant to section 1250104 Florida
19
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
Statutes nor does it alter the statutory requirement that the total consideration they
charge their customers is the amount subject to the tax If allowed to stand the
lower courtrsquos decision will have a considerable impact on the amount of tourist
development tax revenue collected across the state of Florida which could be
utilized for appropriate tourist promotional activities Respectfully this Court
should answer the certified question by holding that the tourist development tax is
imposed on the total consideration charged by the Travel Companies to their
customers rather than the wholesale amount they remit to the hotels
Respectfully submitted
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501
20
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and
foregoing was served by electronic mail to the following on this 17th day of
October 2013
MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom
DARREL J HIEBER ESQ Skadden Arps Slate Meagher
amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom
LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus
ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom
ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom
EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom
MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
21
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22
CERTIFICATE OF COMPLIANCE
I HEREBY CERTIFY that this brief is presented in Times New Roman
font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate
Procedure
s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932
22