The internet rental industry recently received an important victory relating to Tourist Development Tax. TDT is a tax, which can be imposed by counties, on persons who rent lodging accommodations for a period of six months or less. § 125.0104(3)(a)1., Fla. Stat. Importantly, the Florida Supreme Court has held that the taxable privilege is on the consideration received by the property owner for providing occupancy of accommodations to renters. Alachua County v. Expedia, Inc., 175 So. 3d 370 (Fla. 2015).
Despite the ruling in Expedia, Palm Beach County brought a court action against Airbnb, Homeaway.com, and TripAdviser. Those companies host internet marketplaces, where homeowners or their agents can advertise their property for rent. Interested renters then contract with the homeowner to rent the property. Although the companies provide several services to the owners and renters, they do not have any possessory rights in the properties being advertised or rented.
The county argued that the companies are nevertheless liable for TDT because (1) they, through their services, are engaged in the business of renting short-term accommodations and (2) they receive payments on behalf of the homeowners. The Court disagreed with the county. In its ruling, the Court noted that because the companies have no ownership interest in the property and act only as conduits for customers, they are not liable for TDT. The Court thus held that the companies are not required to collect and remit TDT. Gannon v. Airbnb, et al., Case No. 4D19-541 (Fla. 4th DCA, Mar. 25, 2020).
The Court’s ruling deals a blow to counties, as they must pursue thousands of individual renters to ensure TDT is being properly remitted. It is also interesting to note that Airbnb has agreements with several counties regarding TDT. From the Court pleadings, Airbnb argues that those agreements do not admit they are responsible for TDT. Rather, Airbnb claims it entered the agreements to facilitate reporting, collection, and remittance of TDT from homeowners and guests to those counties. For whatever reason, Airbnb has no agreement with Palm Beach County and, based on the recent ruling, has no obligation to assist the county.
If your company provides an online platform like Airbnb, Homeaway.com, and TripAdvisor, and counties are pursuing you for TDT, please contact our firm for a free initial consultation.
About the author: Mr. Taylor is a sales and use tax attorney and an associate in the law firm of Moffa, Sutton, & Donnini, P.A., based in Fort Lauderdale, Florida. Mr. Taylor’s primary practice area is sales and use tax controversy. Mr. Taylor also practices in the area of cigarette & tobacco tax and general commercial litigation. Mr. Taylor received his law degree from Nova Southeastern University, Shepard Broad Law Center. You can learn more about Mr. Taylor on his bio HERE.
AUTHORITY
Gannon v. Airbnb, et al., Case No. 4D19-541 (Fla. 4th DCA, Mar. 25, 2020)
ADDITIONAL RESOURCES
FL DEPARTMETN OF REVENUE PETITION FOR ADMINISTRATIVE HEARING, published April 14, 2020, by Jeanette Moffa, Esq.
FL SALES TAX – CORONAVIRUS LATE PAYMENT FORGIVENESS, published March 26, 2020, by James Sutton, CPA, Esq.
GO TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2103, by James Sutton, CPA, Esq.
RESTAURANT FLORIDA SALES TAX HANDBOOK, published January 4, 2018, by David Brennan, Esq. and James Sutton, CPA, Esq.