Skip to Content
Call Us Today! 888-444-9568

FL TAX LITIGATION ALERT - Leon County Loses Again



Over the past year, there has been significant action on the controversy front involving the Online Travel Companies (OTC's) challenging the Tourist Development Tax. Despite the recent loss by Alachua County, Leon County apparently thought it would have better luck. Of course, as they say, if at first you don't succeed try try again. That is exactly what Leon County did with exactly the same case in exactly the same court as Alachua County, and sure enough it lost as well. On August 16, 2013, the 1st District Court of Appeal issued its opinion upholding the trial court's decision in Leon County v. Expedia et al., Case No. 1D12-4815 (Fla. 1st DCA August 16, 2013).

Under section 125.0104, Florida Statutes ("F.S."), the Tourist Development Tax (a type of "bed tax") is due on the consideration paid for room occupancy within the county and a particular county may charge an additional amount in its discretion. The controversy at issue is whether the "consideration" the law speaks of is the total amount paid by the customer or the discounted amount charged to the OTC and passed through to the customer? The counties have successfully asserted in previous controversy that the "consideration" is the higher amount because that is what is charged to the customer for the room, whereas, the OTC's counters that they are mere "market facilitators" or "intermediaries" and the up-charge is for the OTC's services.

The issue can be more clearly explained using the following two examples:

Scenario 1: Suppose a customer books a room directly from a hotel for $100. At a typical 13% tax rate for various local taxes the customer pays $113. The hotel receives its $100 and the state collects $13 on the transaction. Of the $13 approximately half goes to the county under the Tourist Development Tax regime.

Scenario 2: Using the same example, an OTC purchases the same room from the hotel for $80. At a 13% rate, it pays tax of $10.40, for a total cost of $90.40. The OTC then charges the customer the same $100, which includes a reimbursement for the $10.40 in tax and a $9.60 profit. On virtually the same transaction the state and local government collects $10.40 instead of the $13

While the small difference on a per room basis seems insignificant, the issue has put millions of dollars in tax revenue in jeopardy for the counties. In this case, the judge ruled in favor of the OTC's and stated the TDT is not due on the differential.

The case certainly is not as newsworthy at this point and Florida is still awaiting a legislative change or a Supreme Court decision. In fact the entire detailed and well-reasoned opinion is copied in full, as follows:


AFFIRMED. See Alachua Cnty. v. Expedia, Inc., 110 So. 2d 941 (Fla. 1st DCA 2013).


By rendering this opinion, the court clearly expressed that it has already dealt with this issue and quickly put it to bed. It will be more interesting if another appellate court finds for the county under the same scenario. As an aside, we would like to extend our congratulations to Mark Holcomb and his group, they really have done a masterful job on these cases.

Florida sales tax attorney, OTC tax Florida, tourist development taxAbout the author: Mr. Donnini is a Florida Attorney and an associate in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A., in Fort Lauderdale, Florida. Mr. Donnini's primary practice is Florida tax controversy. Mr. Donnini worked as an accountant for a public REIT prior going to law school and is currently pursuing his LL.M. in Taxation at NYU. If you have any questions please do not hesitate to contact Mr. Donnini by phone or email, which can found at his firm bio HERE.


Orbitz, LLC, et al. v. Broward County and Florida DOR, Case No. 2009-CA-126 (2d. Jud. Cir., July 13, 2012). (Order granting Partial Summary Judgment in favor of taxpayer).

Article on Palm Beach County Tourist Development Tax settlement in February 2012.