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Online travel providers lose chance to settle tax dispute in Florida Legislature

Online travel providers lost their bid to settle a hotel tax dispute with Florida counties in the state Legislature.

Dozens of counties, including Pinellas and Hillsborough, are fighting companies including Expedia and Priceline over what they say are tens of millions of dollars in unpaid local sales taxes.

Legislation backed by the industry would have let online travel companies continue to pay the tax on the lower wholesale cost of a room rather than the retail price they collect from consumers. A state law sanctioning the practice would have spelled doom for the lawsuits.

The legislation had strong Republican support in both chambers. But late last week, the Senate was unable to pass a bill.

''It was a last-minute surprise," said David Downing, deputy director of Visit St. Pete/Clearwater.

Florida counties say they are losing about $30 million a year in tourist development and local sales taxes on lodging.

In Pinellas, online travel companies skirt about $1.4 million in taxes annually, says Tax Collector Diane Nelson. Hillsborough officials estimate the county's loss is $400,000 to $500,000.

''This is a win not only for Pinellas County but for the entire state of Florida," Nelson said Monday. "Tourist tax dollars are vital to the local tourism industry, and we want to make sure that all taxpayers are on the same playing field."

Online travel companies contract with hotels to buy rooms at an arranged price. If a customer books a room and pays $150, the company then pays the hotel a discounted price — $100, for example — and pays local taxes on the lower number. The online travel company keeps the difference as a booking fee or profit.

Florida's local hotel tax laws apply to lodging operators, and the companies contend they merely steer buyers to hotels and the markup is their profit. A spokesman for the Interactive Travel Services Association did not return a call to comment on the legislation.

Pinellas and Hillsborough are among 17 counties suing the travel companies in Leon County. The suit was stalled in discovery while the bills move through the Legislature, said Chad McLeod, a spokesman for Nelson.

"We're hopeful it will get moving along," he said. "We need a court interpretation."

But his boss told county commissioners Monday she will be ready for another industry push on the issue in the Legislature next year.

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

Online travel providers lose chance to settle tax dispute in Florida Legislature 05/09/11 [Last modified: Monday, May 9, 2011 8:58pm]
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