If at first you don't succeed try try again. Everyone is familiar with that infamous cliché. The various counties throughout Florida have taken the old adage literally. Despite losing at the trial level in virtually every case and losing on appeal, Broward County was the latest county to try the same issue again on appeal. Even more surprising was the First District Court of Appeal opined on a similar case, Leon County v. Expedia, et. al., Case No 1D12-4815 (1st DCA August 16, 2013), with the same issue and ruled for the OTC. The ruling again for the OTC was of no surprise following the outcome of Leon's County failed attempt.

By way of background, over the past few years, there has been significant action on the controversy front involving the Online Travel Companies (OTC's) challenging the Tourist Development Tax. 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 litigation 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.

As stated above, despite the recent loss by Alachua County and Leon County (in the very same court), Broward County apparently thought it would have better luck. 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, read identical to Leon County by stating:


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

By rendering this opinion on February 12, 2014, the court clearly expressed that it has already dealt with this issue and quickly put it to bed. It seems the various counties are trying their luck to preserve their appeal rights pending the eventual ruling of the Florida Supreme Court. It has also been brought to our attention that oral argument was hold on this issue at Florida's Supreme Court on April 30, 2014. We will anxious be awaiting the outcome of that case. As an aside, we would like to extend our congratulations yet again to Mark Holcomb and his group, they really have done a masterful job on these cases.

Jerry Donnini, Gerald Donnini, Florida Sales Tax Attorney, Florida Sales Tax Audit, Florida tobacco Tax

About 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 the firm by phone or email via the links at the top of the page.