Local governments want to levy their double-digit hotel occupancy taxes on service fees charged by online travel websites. New York City passed an ordinance, the state of Florida considered legislation and sued Expedia and Orbitz, and 67 other municipalities have filed lawsuits.
In Jan-2009, the Multistate Tax Commission recommended a model bill to impose hotel taxes on service fees charged by travel agents. But treating online intermediaries as hotels is the wrong approach — service fees should not be taxed the same way as a hotel room charge.
NetChoice is now working with the Streamlined Sales Tax Governing Board and with NCSL to evaluate an alternative proposal that taxes agent services as a service rendered to the traveler booking the room.
[1]Emphasis added.
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