in the supreme court of florida...2013/10/17 · electronically filed 10/17/2013 12:12:33 pm et...

Electronically Filed 10172013 121233 PM ET

RECEIVED 10172013 121339 Thomas D Hall Clerk Supreme Court

IN THE SUPREME COURT OF FLORIDA

ALACHUA COUNTY et al

Petitioners CASE NO SC13-838 DCA Case No 1D12-2421

v LT Case No 2009-CA-4319

EXPEDIA INC et al

Respondents ________________________

ON PETITION FOR DISCRETIONARY REVIEW OF A DECISION OF THE DISTRICT COURT OF APPEAL OF FLORIDA FIRST DISTRICT

AMICUS CURIAE BRIEF OF FLORIDA ASSOCIATION OF COUNTIES INC

IN SUPPORT OF PETITIONERS

VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501

Attorney for Amicus Curiae Florida Association of Counties Inc

TABLE OF CONTENTS

Page No

TABLE OF CITATIONSii

STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE 1

SUMMARY OF ARGUMENT2

I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES 3

II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES 7

IIIWHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES 13

CONCLUSION 20

CERTIFICATE OF SERVICE21

CERTIFICATE OF COMPLIANCE 22

i

TABLE OF CITATIONS

Page No

Cases

Alachua County v Expedia Inc 110 So 3d 941 (Fla 1st DCA 2013)16 19

Broward County v Fairfield Resorts Inc 946 So 2d 1144 (Fla 4th DCA 2006) 15

City of Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012)12

City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS 126818 (DNM July 7 2009) 12

City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston 14th Dist 2011)12

City of Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct 2012)12

City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug 27 2012) 8

Expedia Inc v City of Columbus 681 SE2d 122 (Ga 2009) 10

Fla Birth-Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d 992 (Fla 2010) 14

Fla Deprsquot of Revenue v Fla Mun Power Agency 789 So 2d 320 (Fla 2001) 13

Hotelscom LP v City of Columbus 686 SE2d 91 (Ga 2009) 10

ii

Travelscape LLC v South Carolina Department of Revenue 705 SE2d 28 (SC 2011)9 10

Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231 (ND Ill Oct 14 2011) 10 11

Florida Statutes

Section 1250104 passim

Section 1250104(2)(b)214

Section 1250104(3) 6

Section 1250104(3)(a)1 14

Section 1250104(3)(a)2a 14 17

Section 1250104(3)(c) 3

Section 1250104(3)(e) 16

Section 1250104(3)(f) 14

Section 1250104(3)(g)15

Section 21203 2 6 19

Section 21203(1) 6 15 16

Section 21203(1)(a) 15

Section 21203(1)(b)117

Section 21203(2) 6 15

Section 21203(8) - (10) 6

Section 216133 5

Section 216136 5

Other Authorities

Columbus Code of Ordinances section 19-111 10

iii

Dallas Code of Ordinances Article V section 44-35(b)8

House Bill 1241 (2010)Senate Bill 2436 (2010)6

House Bill 1393 (2012) 6

Leon County Code of Ordinances Article III section 11-46(a)(1) 13

Official Code of Georgia Annotated section 48-13-51 (a)(1)(B)(i) 10

Rosemont Code of Ordinances section 10-22 11

Rosemont Code of Ordinances section 10-23(a)11

Rosemont Code of Ordinances sections 10-23(b)-(c) 11

San Antonio Code of Ordinances Article IV section 31-68(b) 8

Senate Bill 156 (2010)House Bill 335 (2010)6

South Carolina Code Annotated section 12-36-920(A) 9

South Carolina Code Annotated section 12-36-920(E)9

The American Heritage College Dictionary Fourth Edition 17

iv

STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE

The Florida Association of Counties (FAC) is a statewide association of

Florida counties organized as a not-for-profit corporation for the purpose of

representing county government in the State Among the express purposes for

which FAC was organized is to defend the rights of county government under

any constitutional provision (and) statute The vast majority of Floridas 67

counties have exercised their option to impose a tourist development tax pursuant

to section 1250104 Florida Statutes The aggregate proceeds of the tax received

by all Florida counties during the last county fiscal year was in the tens of millions

of dollars FACs member counties are thereby deprived of a substantial amount of

statutorily authorized tax revenue as a consequence of the tax liability position

taken by the Travel Companies1 in their interpretation of section 1250104 FACs

participation as an amicus curiae will provide the Court with an analysis of these

unpaid taxes and of court decisions in other states with less favorable statutory

authorizations

SUMMARY OF ARGUMENT

Respondents (DefendantsAppellees below) EXPEDIA INC HOTELSCOM LP HOTWIRE INC ORBITZ LLC ORBITZ FOR BUSINESS INC TRIP NETWORK INC PRICELINECOM INC TRAVELWEB LLC and TRAVELOCITYCOM LP will be collectively referred to as the Travel Companies

1

1

By use of the merchant model the Travel Companies evade taxation on the

total consideration received for the rental of hotel rooms in the State of Florida As

a result those Florida counties which impose the tourist development tax pursuant

to the provisions of section 1250104 Florida Statutes as well as the State of

Florida have lost millions of tax dollars which could have been utilized for

appropriate tourist promotional activities

Courts across the country have determined that the Travel Companies are

liable for similar taxes on the total consideration they receive from their customers

for hotel room reservations and have specifically ruled that one does not have to be

an operator vendor or an actual hotel to be responsible for the collection and

remittance of occupancy taxes on that total consideration

Even though the privilege taxed under section 1250104 Florida Statutes is

separate and distinct from the taxable privilege established in section 21203

Florida Statutes the Travel Companiesrsquo tax liability and duty to collect those taxes

under the merchant model are the same under either statute That is they are

responsible for collecting and remitting taxes on the total consideration paid

ARGUMENT

2

I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES

Section 1250104(3)(c) Florida Statutes provides [t]he tourist development

tax shall be levied imposed and set by the governing board of the county at a rate

of 1 percent or 2 percent of each dollar and major fraction of each dollar of the

total consideration charged for such lease or rental (Emphasis added) The

practice of collecting tourist development taxes only on a portion of the

consideration paid by the person reserving the hotel room under the ldquomerchant

modelrdquo used by the Travel Companies results in the loss of millions of dollars in

tax revenue across the State

Under the ldquomerchant modelrdquo Travel Companies contract with hotels for the

right to broker or facilitate the reservation of hotel rooms at a discount or

wholesale rate (R at 4057 4769-70 8618-19)2 They then advertise and offer

the rooms for sale to the public on their websites (R at 5747 5811) When a

customer purchases a hotel room reservation from a Travel Company the Travel

Company charges the customer an amount that is greater than the wholesale rate

Id This marked-up amount is advertised as the room rate (R at 5747-48

8391-92) Although the Travel Companies state that the room rate is a

2 Reference to materials in the record will be designated as R followed by the appropriate page number

3

combination of the wholesale rate and their facilitation fees they do not

disclose to the public which portion of the room rate is for their facilitation fee

(R at 7477 8391-92 8619) At the end of the transaction the customer pays the

Travel Company directly a total amount that equals the room rate plus taxes and

service fees but it is never disclosed to the customer which portion is for ldquotaxesrdquo

and which portion is for ldquoservice feesrdquo (R at 5747-48 8391-92 8619) A

reservation will not be made until the entire amount is charged to the customers

credit card Id

Upon checking into the hotel the customer does not pay the hotel any

money to occupy the room or any fees or taxes but merely provides a credit card

for incidentals (R at 5962) After the customer has completed hisher stay the

hotel is required to send the Travel Companies an invoice for the wholesale rate

and the occupancy taxes based upon that wholesale rate (R at 7564) Under this

model the tourist development tax is calculated on the wholesale rate the Travel

Companies negotiate with the hotels and not the total amount they charge their

customers for the room reservation (R at 9155 56) The Travel Companies retain

whatever they have collected in excess of the amount remitted to the hotel Id If

the hotel fails to submit an invoice in the time period designated by the contract

the Travel Companies retain all monies collected from the consumer including any

amount purportedly collected for taxes (R 7564)

4

Under the merchant model the total consideration charged for such lease or

rental is the amount the Travel Companies charge their customers credit card for

the room reservation By collecting and remitting the tourist development tax on

only the wholesale rate agreed to with the hotels the Travel Companies are

evading taxation in violation of the clear and unambiguous language of the statute

Since the commencement of this litigation several bills have been filed in

the Florida Legislature relating to the statutory obligation of the Travel Companies

to collect and remit state and local taxes on the total consideration they charge and

collect their customers for hotel rooms in Florida The impact consensus estimates

adopted by the Revenue Estimating Conference for these proposed bills reveal the

extent of the uncollected revenues under the merchant model used by the Travel

Companies3

In 2010 the Revenue Estimating Conference analyzed Senate Bill

156House Bill 335 which would have created section 21203(8) through (10)

Florida Statutes to provide the that term engaging in the business of renting

3The Revenue Estimating Conference (REC) consists of four principals one each representing the Governors office the House of Representatives the Senate and the Legislative Office of Economic and Demographic Research The REC analyzes legislation to determine impact on state and local revenues It operates by unanimous consent on official information regarding anticipated state and local government revenues for purposes of state planning and budgeting sectsect 216133 216136 Fla Stat The impact consensus estimates adopted by the Revenue Estimating Conference are available at wwwedrstatefluscontentconferences revenueimpactindexcfm

5

leasing letting or granting a license to use transient rental accommodations

includes the activities conducted by the Travel Companies The bills would also

have granted the Travel Companies a tax amnesty period for unpaid taxes and any

applicable penalty or interest which the Revenue Estimating Conference estimated

would be $1822 million for fiscal years 1999-2000 through 2009-10 (App 2-2)

Also in 2010 the Revenue Estimating Conference analyzed House Bill

1241Senate Bill 2436 which would have amended both sections 1250104(3) and

21203(1) and (2) Florida Statutes to provide that payments received by the

Travel Companies for facilitating the reservation of hotels rooms were not included

in the term consideration The Revenue Estimating Conference determined that

the impact to Floridas Counties due to these proposed amendments was $227

million dollars (App 3-1)

In 2012 House Bill 1393 was filed and sought to amend sections 1250104

and 21203 Florida Statutes in a similar fashion to the amendments proposed by

HB1241SB2436 in 2010 The Revenue Estimating Conference stated in its

adopted consensus estimate

[T]he conference adopted a negative indeterminate fiscal impact due to the difficulty in determining how many existing taxpayers would change their business practices in order to qualify for the same treatment afforded online travel companies and over what timeframe those changes would take place However the magnitude of the impact is potentially large Though the likelihood of this outcome is unknown if 50 of the taxable activity

6

were to migrate to the treatment allowed by the bill by FY 2015-16 the impact on state revenues is estimated to be a reduction of $91 million and on local revenues an additional reduction of $87 million over what is shown on the table

Id The table referenced above by the Revenue Estimating Conference showed that

the impact on the tourist development tax was $320 million for FY 2012-13 $366

million for FY 2014-15 and $393 million for FY 2015-16 (App 4-2)

As recognized by the Revenue Estimating Conference the Travel

Companies failure to pay taxes on the total consideration they receive from their

customers for reservation of hotel rooms in Florida has deprived and continues to

deprive the State of Florida and its Counties of statutorily authorized tax revenues

II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES

State and federal courts across the country have determined that the Travel

Companies are liable for the payment of tourist or occupancy taxes on the total

consideration they receive under the merchant model and have rejected the Travel

Companies efforts to misrepresent the nature of the transaction in order to evade

their liability In many of these cases the enabling statutes or the authorizing

ordinances at issue contain provisions which are less favorable for imposing tax

liability on the total consideration received by the Travel Companies from the

7

person making the reservation than those contained in section 1250104 Florida

Statutes

In City of San Antonio v Hotelscom 2011 US Dist LEXIS 72665 (WD

Tex July 1 2011) clarified by 2012 US Dist LEXIS 189166 (WD Tex Aug

27 2012) the court was required to interpret two separate types of ordinances

which imposed occupation taxes on hotel stays The San Antonio ordinances state

that the tax rate shall be equal to a certain percentage of the total price paid by

the occupant for the right to occupy a sleeping room See San Antonio Code of

Ordinances Art IV sect 31-68(b) In contrast Dallas ordinances provide that the

tax rate shall be a certain percentage of the consideration paid by the occupant of

the room to the hotel See Dallas Code of Ordinances Art V sect 44-35(b) The

Travel Companies argued that only the amounts paid to the hotel could be taxed

and because the customer or occupant of the room in a merchant model transaction

never pays the hotel the total retail price can never be taxed City of San Antonio

2011 US Dist LEXIS 72665 at 65 66 The court rejected this argument and held

that the consideration paid by the occupant of the room will always be the total

retail price that the customer pays for the right of occupancy Id at 66

In South Carolina the states enabling statute imposes an Accommodations

Tax on every person engaged or continuing within this State in the business of

furnishing accommodations to transients for consideration SC Code Ann sect 12-

8

36-920(E) The application of this statute to the Travel Companies was considered

by the Supreme Court of South Carolina in Travelscape LLC v South Carolina

Department of Revenue 705 SE2d 28 (SC 2011) Travelscape argued that it was

not subject to the tax because it is not engaged in the business of furnishing

accommodations The court rejected this argument and found the context of

furnish as it appears [in the law] demonstrates that it encompasses the activities of

entities such as Travelscape who whether directly or indirectly provide hotel

reservations to transients for consideration Travelscape LLC 705 SE2d at 34

The court also determined that the legislature intended to levy the tax not merely

on those physically providing sleeping accommodations but on those entities who

were accepting money in exchange for supplying hotel rooms Id at 35

On the issue of the amount subject to the tax section 12-36-920(A) of the

South Carolina Code provides it is the gross proceeds derived from the rental or

charge for any rooms lodgings or sleeping accommodations furnished to

transients by any place in which rooms lodgings or sleeping accommodations

are furnished to transients for consideration In interpreting this provision the

court concluded that the controlling statute imposes a sales tax on the gross

proceeds received by Travelscape in exchange for furnishing hotel

accommodations in South Carolina Id at 39

9

In Georgia the relevant enabling act provides for municipalities to impose

an excise tax at the applicable rate on the lodging charges actually collected See

OCGA sect 48-13-51 (a)(1)(B)(i) The City of Columbus enacted an ordinance which

imposes

[A]n excise tax in the amount of seven percent of the charge to the public upon the furnishing for value of any room or rooms or lodging or accommodations furnished by any person licensed or required to pay business or occupation taxes to Columbus for operating a hotel within the meaning of this article

Columbus Code sect 19-111 The Supreme Court of Georgia ordered the Travel

Companies to collect the hotel occupancy tax based upon the total amount they

disclosed to the customer as the room rate room charge or other comparable term

even though as in Florida the companies argued that it should be based on the

wholesale price paid to the hotels See Expedia Inc v City of Columbus 681

SE2d 122 (Ga 2009) Hotelscom LP v City of Columbus 686 SE2d 91 (Ga

2009)

In Village of Rosemont v Pricelinecom Inc 2011 US Dist LEXIS 119231

(ND Ill Oct 14 2011) the federal trial court entered final summary judgment in

favor of the village in its action alleging that the Travel Companies failed to pay

the full amount of hotel tax due The villages ordinance imposed a tax upon the

privilege of renting a hotel or motel room within the Village of Rosemont at a rate

of 7 of the room rental rate but not on taxes or other non-room rental charges

10

added to the hotel bill Rosemont Ordinance sect 10-23(a) Although the tax is paid

for by the rentor it is the duty of the owner of every hotel to secure the tax from

the rentor and to pay over to the Village Collector the tax sectsect 10-23(b)-(c)

Owner is defined under the Ordinance as any person (a) having an ownership

interest in [a hotel] (b) conducting the operation of a hotel or (c) receiving the

consideration for the rental of such hotel or motel room sect 10-22 In reviewing the

elements of the merchant model the court held [b]ecause the customer cannot

access his hotel room unless and until he pays the OTCs entire charge the Travel

Companies are owners who receive consideration for rental[s] within the

meaning of the Ordinance Village of Rosemont 2011 US Dist LEXIS 119231

at 8-9 The court went on to hold that defendants fees and markups are part of the

rental rate subject to the Tax Id at 13 The case is now awaiting trial on the issue

of damages

In response the Travel Companies are likely to cite to cases in which courts

have determined that they were not liable for similar taxes Yet in all such cases

the enabling statutes or the ordinances themselves impose the tax on vendors

operators or hotels and these terms were defined in the statutes or ordinances

to mean one who was a person who owns or operates the hotel the proprietor of

the hotel or every establishment kept used maintained or held out to the public

to be a place where sleeping accommodations are offered to guests See City of

11

Columbus Ohio v Hotelscom LP 693 F3d 642 (6th Cir 2012) City of

Philadelphia v City of Philadelphia Tax Review Bd 37 A3d 15 (Pa Commw Ct

2012) City of Gallup New Mexico v Hotelscom LP 2009 US Dist LEXIS

126818 (DNM July 7 2009) Clearly none of these cases apply in the instant

case because neither the state enabling statute nor the relevant ordinances contain

the same limiting words

In City of Houston v Hotelscom LP 357 SW3d 706 (Tex App Houston

14th Dist 2011) the citys ordinance imposed the subject tax on the amount paid

to the hotel on the occupants behalf for the right to use a room ordinarily used for

sleeping The court held that only the amount paid by the Travel Companies to the

hotels and not the amount paid by a customer to the Travel Company was subject

to the tax Id at 714 However unlike the City of Houstons ordinance cited above

Floridas enabling statute and the counties ordinances at issue do not limit the

application of the tax only to the amount paid to the hotel Instead Floridas

enabling statute imposes the tax on the consideration paid for occupancy without

specifying that the consideration must be paid specifically to a hotel

Similarly Leon Countys ordinance levies a tourist development tax at the

rate of five percent of each dollar of the total rental andor consideration

charged every person who rents leases or lets any living quarters or

accommodations See Leon County Code of Ordinances Art III sect 11-

12

46(a)(1) The ordinance like the statute does not specifically require that the

consideration be paid to a hotel for the tax to apply

The language of both Floridas enabling statute and the counties ordinances

is clear and unambiguous The Travel Companies are not the occupants of the hotel

rooms and have no right to occupancy Therefore the wholesale amount the

hotels receive from the Travel Companies is not the total amount received for

occupancy and is not the subject of the tax The tax is clearly intended to be

imposed on the total amount of consideration received by the Travel Companies

from persons who reserve accommodations on the companies websites

III WHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES

Words matter in statutory construction A courts function is to interpret

statutes as they are written and give effect to each word in the statute Fla Deprsquot

of Revenue v Fla Mun Power Agency 789 So 2d 320 324 (Fla 2001)

Statutory interpretation begins with the plain meaning of the statute Fla Birth-

Related Neurological Injury Comp Assrsquon v Deprsquot of Admin Hearings 29 So 3d

992 997 (Fla 2010)

13

The following words are used by the Legislature in its authorization of the

local option tourist development tax for counties in section 1250104 Florida

Statutes

Tourist means a person who rents or leases transient accommodations as described in paragraph (3)(a)

sect 1250104(2)(b)2 Fla Stat

[E]very person who rents leases or lets for consideration any living quarters or accommodations in any hotel for a term of 6 months or less is exercising a privilege which is subject to taxation

sect 1250104(3)(a)1 Fla Stat

Tax shall be due on the consideration paid for occupancy in the county

sect 1250104(3)(a)2a Fla Stat

The tourist development tax shall be charged by the person receiving the consideration for the lease or rental and it shall be collected from the lessee tenant or customer at the time of payment of the consideration for such lease or rental

sect 1250104(3)(f) Fla Stat (emphasis added)

The person receiving the consideration for such rental or lease shall receive account for and remit the tax to the Department of Revenue

sect 1250104(3)(g) Fla Stat (emphasis added)

14

In contrast to the tourist development tax set forth above the following

words are those chosen by the Legislature to describe its imposition of the separate

state sales tax on transient rentals in section 21203(1) Florida Statutes

[E]very person is exercising a taxable privilege who engages in the business of renting leasing letting or granting a license to use any living quarters in connection with any hotel

sect 21203(1)(a) Fla Stat (emphasis added)

For the exercise of such taxable privilege a tax is hereby levied on the total rental charged by the person charging or collecting the rental


[T]he tax shall be charged by the lessor or person receiving the rent and shall be due and payable at the time of the receipt of such rental payment by the lessor or person who receives said rental or payment

sect 21203(2) Fla Stat (emphasis added)

The same duties imposed by this chapter upon dealers in tangible personal property respecting the collection and remission of the tax shall apply to and be binding upon all persons who manage or operate hotels and to all persons who collect or receive such rents on behalf of such owner or lessor taxable under this chapter


As determined by the Fourth District Court of Appeal in Broward County v

Fairfield Resorts Inc 946 So 2d 1144 1146 (Fla 4th DCA 2006) section

21203(1) Florida Statutes regulates the imposition and administration of the

15

transient rentals tax and is inapplicable to analyzing the county tourist

development tax at issue here4 Section 1250104 Florida Statutes does not have

the same requirement that the person engage ldquoin the business of renting leasing

letting or granting a license found in section 21203(1) Florida Statutes

Additionally as correctly noted by Judge Padovano in his dissent in Alachua

County v Expedia Inc110 So 3d 941 950 (Fla 1st DCA 2013)

Statutes are read in pari materia only to resolve ambiguities and as I have explained there is no ambiguity in section 1250104 Moreover section 1250104 was enacted after section 21203(1)(a)(1) and the specific language in section 21203(1)(a)(1) about the privilege of operating a hotel was not carried forward in section 1250104 If we are to draw any conclusion from this omission at all it would be that the taxable event for the purpose of section 1250104 is not the privilege of operating a hotel

(App 1)

As shown above there are two different privileges being taxed by these two

statutes However the Travel Companiesrsquo tax liability and duty to collect under the

merchant model to facilitate hotel reservations in the counties of this State are

identical Both statutes provide that the [t]ax shall be due on the consideration

4 See also section 1250104(3)(e) Florida Statutes that

The tourist development tax shall be in addition to any other tax imposed pursuant to chapter 212 and in addition to all other taxes and fees and the consideration for the rental or lease

16

paid for occupancy See sectsect 1250104(3)(a)2a 21203(1)(b)1 Fla Stat Neither

consideration nor occupancy is defined in either Chapter Consideration is

defined in The American Heritage College Dictionary Fourth Edition as

something promised given or done that has the effect of making an agreement a

legally enforceable contract Occupancy is defined therein as the period during

which one owns rents or uses certain premises or land In the context of the

merchant model transactions at issue the consideration is the total amount charged

to the customers credit card in exchange for the right to occupy a room sometime

in the future That amount includes the room rate plus taxes and service fees

The Travel Companies will not facilitate the hotel reservation unless that total

amount is paid

Neither statute refers to the wholesale price paid for the right to facilitate a

reservation and it is impossible to construe either of the statutes as imposing a tax

on wholesale amounts paid by non-occupants for the right to facilitate a

reservation rather than occupy a hotel room Therefore the plain language of both

statutes requires the tax be paid on the total retail price that must be paid by the

customer for the right to occupy the hotel room

Similarly both statutes require that the tax be charged to the customer at the

time of payment of the consideration for the rental and remitted to the applicable

tax authority by the person receiving the consideration for the rental Clearly

17

under the merchant model the Travel Companies are the person receiving the

consideration for the rental and are therefore responsible for remitting the tax to

either the Department of Revenue or the county tax collector Additionally by

contracting with the hotels to collect the taxes from their (the Travel Companies)

customers the Travel Companies are the entities receiving the consideration for

the rentals

In view of the foregoing the plain language of the statutes require that the

tourist development tax as well as the transient rentals tax be collected on the

total amount charged to a customers credit card for the right to occupy a hotel

room and not the wholesale rate remitted by the Travel Companies to the hotel

By utilizing the merchant model to facilitate hotel reservations in the counties of

this state the Travel Companies are the person receiving the consideration for the

rental of the hotel room and are liable to collect and remit the tax on that total

amount

The plain meaning of the words chosen by the Legislature in section

1250104 Florida Statutes serves as the foundation for the following conclusion

drawn by Judge Padovano in his dissent

The local option tourist development tax authorized by section 1250104 Florida Statutes is a tax on the amount of money a tourist pays to stay in a hotel in Florida The portion of those funds earned by an online travel company whether remitted by the hotel after payment of the bill or retained initially by the travel company at the

18

time of the reservation is subject to the tax This conclusion is required not only by precedent we are bound to follow but also by the plain language of the statute

Alachua Cnty 110 So 3d at 947 (Padovano J dissenting) Judge Padovano

discussed several ldquokey partsrdquo of the statute--that the tax ldquoshall be due on the

consideration paid for occupancyrdquo and that the amount taxed on is the ldquototal

considerationrdquo--in reaching his conclusion that section 1250104 provides that ldquothe

tax is to be levied on the full amount paid for the roomrdquo Id at 949 Finally Judge

Padovano concluded that section 1250104 Florida Statutes ldquois not confusing or

unclear It imposes a tax on the funds paid by a tourist to rent a room in a hotel

The matter is no more complicated than thatrdquo Id at 949-50

The tourist development tax is imposed for the privilege of ldquooccupancyrdquo of a

Florida hotel room and not the privilege of owning or operating a hotel under the

statutory plain language The Travel Companiesrsquo construction of sections

1250104 and 21203 Florida Statutes attempts to confuse the issues in an effort to

avoid tax liability on the total amount of consideration received by the customer

for occupancy under the Travel Companiesrsquo ldquomerchant modelrdquo and should not be

condoned by this Court

CONCLUSION

The Travel Companies merchant model does not relieve them of the duty to

collect and remit the tourist development tax pursuant to section 1250104 Florida

19

Statutes nor does it alter the statutory requirement that the total consideration they

charge their customers is the amount subject to the tax If allowed to stand the

lower courtrsquos decision will have a considerable impact on the amount of tourist

development tax revenue collected across the state of Florida which could be

utilized for appropriate tourist promotional activities Respectfully this Court

should answer the certified question by holding that the tourist development tax is

imposed on the total consideration charged by the Travel Companies to their

customers rather than the wholesale amount they remit to the hotels

Respectfully submitted

s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932 gdelegalfl-countiescom General Counsel Florida Association of Counties Inc 100 South Monroe Street Tallahassee Florida 32301 Telephone (850) 922-4300 Facsimile (850) 488-7501

20

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the above and

foregoing was served by electronic mail to the following on this 17th day of

October 2013

MARK E HOLCOMB ESQ Madsen Goldman amp Holcomb LLP 1705 Metropolitan Boulevard Suite 101 Tallahassee Florida 32308-3765 mholcombmgh-lawcom

DARREL J HIEBER ESQ Skadden Arps Slate Meagher

amp Flom LLP 300 South Grand Avenue Suite 3400 Los Angeles California 90071 Darrelheiberskaddencom

LARRY SMITH ESQ MARY G JOLLEY ESQ County of Volusia 123 West Indiana Avenue Suite 301 DeLand Florida 32720 mjolleycovolusiaflus

ROBERTO MARTINEZ ESQ STEPHANIE A CASEY ESQ COLSON HICKS EIDSON 255 Alhambra Circle Penthouse Coral Gables Florida 33134 bobcolsoncom frankcolsoncom

ROBERT L NABORS ESQ HARRY F CHILES ESQ Nabors Giblin amp Nickerson PA 1500 Mahan Drive Suite 200 Post Office Box 11008 Tallahassee Florida 32302 rnaborsngnlawcom hchilesngnlawcom

EDWARD A DION ESQ Nabors Giblin amp Nickerson PA 208 SE Sixth Street Fort Lauderdale Florida 33301 edionngnlawcom

MAJOR B HARDING ESQ RUTH E VAFEK ESQ STEVEN M HOGAN ESQ Ausley amp McMullen PA 123 South Calhoun Street Tallahassee Florida 32301 mhardingausleycom rvafekausleycom shoganausleycom

s VIRGINIA SAUNDERS DELEGAL Florida Bar No 989932

21

CERTIFICATE OF COMPLIANCE

I HEREBY CERTIFY that this brief is presented in Times New Roman

font 14 point type as required by Rule 9210(a)(2) Florida Rules of Appellate

Procedure


22

TABLE OF CONTENTS

Page No

TABLE OF CITATIONSii

STATEMENT OF INTEREST AND IDENTITY OF AMICUS CURIAE 1

SUMMARY OF ARGUMENT2

I THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES EVADES TAXATION ON THE TOTAL CONSIDERATION RECEIVED FOR THE RENTAL OF A HOTEL ROOM AND DEPRIVES THE STATE AND COUNTIES OF STATUTORILY AUTHORIZED TAX REVENUES 3

II COURTS IN OTHER STATES WITH LESS FAVORABLE STATUTORY AUTHORIZATIONS HAVE HELD THE TRAVEL COMPANIES LIABLE FOR THE TAX ON THE TOTAL CONSIDERATION PAID FOR THE RENTAL OF A HOTEL ROOM UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES 7

IIIWHILE THE PRIVILEGE TAXED BY THE TOURIST DEVELOPMENT TAX IMPOSED BY COUNTIES PURSUANT TO SECTION 1250104 FLORIDA STATUTES DIFFERS FROM THE PRIVILEGE TAXED ON TRANSIENT RENTALS IMPOSED BY THE STATE OF FLORIDA BY SECTION 21203 FLORIDA STATUTES THE TAX LIABILITY AND THE DUTY TO COLLECT TAXES UNDER THE MERCHANT MODEL UTILIZED BY THE TRAVEL COMPANIES ARE THE SAME FOR BOTH TAXES 13

CONCLUSION 20

CERTIFICATE OF SERVICE21

CERTIFICATE OF COMPLIANCE 22

i

TABLE OF CITATIONS

Page No

Cases












ii



Florida Statutes


Section 1250104(2)(b)214

Section 1250104(3) 6

Section 1250104(3)(a)1 14

Section 1250104(3)(a)2a 14 17

Section 1250104(3)(c) 3

Section 1250104(3)(e) 16

Section 1250104(3)(f) 14

Section 1250104(3)(g)15

Section 21203 2 6 19

Section 21203(1) 6 15 16

Section 21203(1)(a) 15

Section 21203(1)(b)117

Section 21203(2) 6 15

Section 21203(8) - (10) 6

Section 216133 5

Section 216136 5

Other Authorities


iii



House Bill 1393 (2012) 6











iv















authorizations

SUMMARY OF ARGUMENT


1

1

















ARGUMENT

2



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22

TABLE OF CITATIONS

Page No

Cases












ii



Florida Statutes


Section 1250104(2)(b)214

Section 1250104(3) 6

Section 1250104(3)(a)1 14

Section 1250104(3)(a)2a 14 17

Section 1250104(3)(c) 3

Section 1250104(3)(e) 16

Section 1250104(3)(f) 14

Section 1250104(3)(g)15

Section 21203 2 6 19

Section 21203(1) 6 15 16

Section 21203(1)(a) 15

Section 21203(1)(b)117

Section 21203(2) 6 15

Section 21203(8) - (10) 6

Section 216133 5

Section 216136 5

Other Authorities


iii



House Bill 1393 (2012) 6











iv















authorizations

SUMMARY OF ARGUMENT


1

1

















ARGUMENT

2



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22



Florida Statutes


Section 1250104(2)(b)214

Section 1250104(3) 6

Section 1250104(3)(a)1 14

Section 1250104(3)(a)2a 14 17

Section 1250104(3)(c) 3

Section 1250104(3)(e) 16

Section 1250104(3)(f) 14

Section 1250104(3)(g)15

Section 21203 2 6 19

Section 21203(1) 6 15 16

Section 21203(1)(a) 15

Section 21203(1)(b)117

Section 21203(2) 6 15

Section 21203(8) - (10) 6

Section 216133 5

Section 216136 5

Other Authorities


iii



House Bill 1393 (2012) 6











iv















authorizations

SUMMARY OF ARGUMENT


1

1

















ARGUMENT

2



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22



House Bill 1393 (2012) 6











iv















authorizations

SUMMARY OF ARGUMENT


1

1

















ARGUMENT

2



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22















authorizations

SUMMARY OF ARGUMENT


1

1

















ARGUMENT

2



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22

















ARGUMENT

2



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22



















3








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22








credit card Id













4












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22












Companies3





5


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22


















6

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22

















7


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22


Statutes



















8




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22




















9




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22




imposes








2009)







10













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22













of damages








11





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22





















12
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22
















992 997 (Fla 2010)

13



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22



Statutes











14















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22















15








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22








(App 1)







16











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22











amount is paid










17






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22






the rentals








amount





18

















CONCLUSION



19











20




October 2013










21




Procedure


22

















CONCLUSION



19











20




October 2013










21




Procedure


22











20




October 2013










21




Procedure


22




October 2013










21




Procedure


22




Procedure


22

in the supreme court of florida...2013/10/17 · electronically filed 10/17/2013 12:12:33 pm et...

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