This blog has moved.

Please visit our new page here

« Marco Rubio adds to his communications team | Main | Presidency 5 debate, FL straw poll could separate "wheat from the chaff" »

Revenue department posted tax advice for online hotel tax, then removed it

The state tax collector was caught in the crosshairs Wednesday of a simmering controversy over online hotel tax collections as a St. Petersburg legislator accused the department of bowing to political pressure.

State Rep. Rick Kriseman said the Department of Revenue was walking away from an estimated $500 million a year in state and local sales taxes because it has refused to force payment from online travel companies such as Expedia, Travelocity, and their partners who sell hotel rooms online on behalf of large hotel chains.

Since June, however, the department has said it is not clear whether the industry owes the tax — an apparent contradiction to advice it gave the hotel industry in its online “Standard Industry Guide” as recently as June.

“Why hasn’t our state taken any action to collect the money that is owed?’’ Kriseman asked at a press conference at the Capitol. He also blasted Attorney General Pam Bondi for failing to prosecute the companies for evading taxes.

Under the disputed practice, the online travel companies sell unbooked hotel rooms held by large hotel chains. They remit the tax based only on the rate they pay the hotel – not on the markup they charge customers. The difference they collect is kept as profit. Travel companies say it is their service fee. Cities, counties and others have sued the industry because they say the total price the customer pays is taxable.

On June 16, Bondi had asked the department to adopt rules to clarify whether the companies owed the tax. A week after she made the request, the Department of Revenue removed from its web site the language in its industry guide that said online travel companies owed taxes on the full amount they charge customers. It had been posted online at least since January.

“It had been posted in error,’’ said Department of Revenue General Counsel Marshall Stranburg. “It had been put together by someone on the general staff but had not been reviewed by the office of the general counsel,’’ he said.

But Kriseman said he is suspicious, given the fact that the industry is pushing a bill to clearly exempt them from the tax. He said the department is “very vigilant to pursue violators who don’t pay their taxes when that violator is an individual or a small business.’’

The difference, Kriseman said, is that “small business owners and individuals do not have a team of lobbyists.”

Kriseman, a Democrat, said the call for collecting the tax has long had bi-partisan support. He read a statement from Diane Nelson, the Pinellas County tax collector and a Republican who has been fighting the issue for nearly a decade

“The final price the consumer pays is and has always been the taxable price,’’ Nelson said. “The law is very clear and all the players in this game have known for years taxes are due. I urge the attorney general’s office and the Department of Revenue to enforce the law.”

Meanwhile, Bondi has backed off her call for the department to clarify the rule.

“It caused concerns that it may effect pending litigation with certain counties trying to settle claims and we did not want to hurt those counties in that pending litigation,’’ she said Wednesday. “In our opinion, the best resolution — as we’ve always said — is legislative action. This needs a legislative resolution and we hope that someone proposes something this session.’’

Rep. Jason Brodeur, a Sanford Republican who sponsored the legislation last year, said he will file it again this year. It was co-sponsored last year by Rep. Joe Abruzzo, a West Palm Beach Democrat.

Bondi also disagreed with Kriseman that she should be prosecuting the companies for failing to pay the tax.

“I’m not the Department of Revenue,’’ she said. “That’s not the function of the attorney general.” Story here.