Proposed OTC Tax Exemption Legislation

AAHOA FIGHTS AGAINST THE PROPOSED UNFAIR FEDERAL TAX EXEMPTION LEGISLATION FOR ONLINE TRAVEL COMPANIES (OTCs)

The Issue:

The online travel companies (OTCs) such as Expedia, Travelocity, Orbitz, Hotels.com, etc. have continued to grow as more travelers are shopping for hotel reservations through their online sites.  The OTCs capture billions of dollars from their online sales of hotel guest rooms, but they have NOT been paying occupancy or bed taxes on their share of the revenues.

The Impact:

  • Many State and local governments have filed lawsuits against the OTCs to recover the uncollected taxes. Some courts have held the OTCs liable for the taxes, while other courts have not.
  • The OTCs are now trying to introduce Federal legislation known as the Internet Travel Tax Fairness Act (ITTFA).  The Federal ITTFA would prohibit a State or municipality from collecting occupancy taxes on the OTCs’ share of the revenues from the internet bookings.
  • Federal ITTFA legislation would:
  1. Deprive States and municipalities of critical occupancy tax revenue owed by the OTCs that is designed to promote tourism, fund convention centers and visitors’ bureaus, and support related causes during these difficult economic times;
  2. Have a damaging ripple effect on many small businesses (in addition to hotels), such as restaurants, gas stations, and local attractions that rely on tourism funding; and
  3. Place hoteliers at both a competitive and fiscal disadvantage because this legislation would exempt OTCs from liability for occupancy taxes, which would inevitably result in higher taxes for hotels.  This will further harm the travel industry and prevent a strong recovery in the future.

 
The Legislative Solution:

If this Federal ITTFA is passed, AAHOA is very concerned that all hotels will be subjected to INCREASED occupancy and other taxes by the States and local governments that the OTCs have refused to pay.  AAHOA hoteliers in some parts of the country have already been advised by the local authorities that they will be required to pay whatever occupancy taxes the OTCs have failed to remit on the OTCs’ share of the booking revenues.  This is UNFAIR and must be STOPPED.

AAHOA strongly encourages its members to contact their Members of Congress and urge them to protect hotel owners and to oppose this federal tax exemption legislation.  AAHOA will continue to monitor this important legislation that will have a significant impact on its members and all hotel owners across the country.