If a case has “significant public and media interest,” the Florida Supreme Court designates the case as “a high profile case.” Recently, the Court decided to take on a high profile case that addresses how online-based travel companies like Expedia should handle bed taxes — an issue that impacts the pocketbooks of local governments that rely on that revenue. The case is styled “Alachua County, et al v. Expedia, Inc., et al” and the eventual disposition of the issues in the case could be significant to Walton and Okaloosa Counties, who are parties to the case.



The Tourist Development Tax was enacted in 1977 and allows participating counties, like Okaloosa and Walton, to assess the bed tax for stays within the county.  The tax applies to stays of 6 months or less.  Online travel companies, like Expedia, only apply Florida’s Tourist Development Tax, or “bed tax,” to the reduced rate they pay hotels. The counties in this case want them to apply the bed tax to the total amount they charge for a room.  But the counties want the online travel companies to pay the bed tax on the entire amount charged to the consumers.



Before the Supreme Court took the case, the First District Court of Appeals held that the additional sums of money earned by companies like Expedia and Orbitz are not taxable.  The First DCA found that the on-line Companies are not in the business of renting, leasing, letting, or granting licenses to use transient accommodations. Moreover, the court held that the Companies operate their businesses, including sophisticated websites, to the benefit of both their customers and the hotels. “The Tourist Development Tax does not plainly evince an intention to include the additional fees that Companies charge for advertising hotel facilities, setting up internet websites, and forwarding and assisting in the making of reservations on behalf of hotel customers. The rent itself — the amount charged by the hotels for allowing customers to occupy their rooms — is what has been taxed.”



The Florida Counties disagree and are arguing to the Florida Supreme Court that the Travel Companies should collect and remit the Tourist Development Tax on the total amount of consideration received by the Travel Companies from the tourists, and not on the net amount the Travel Companies ultimately pay to hotels. At some point in the near future, the Florida Supreme Court will set the issue for oral arguments.



Bill Martin is a former B-52 and B-1B pilot and senior attorney for the Federal Deposit Insurance Corporation. He is currently a partner in the law firm of Keefe, Anchors & Gordon in Fort Walton Beach, Fla.