Sixth Circuit: Online travel companies not required to collect municipal guest taxes 

September 10: The U.S. Court of Appeals for the Sixth Circuit today affirmed a federal district court’s grant of summary judgment to online travel companies finding that the Ohio plaintiff cities had not produced sufficient evidence to create a genuine issue of material fact as to whether the online travel companies collected guest taxes that were not remitted to the cities. City of Columbus v. Hotels.com L.P., No. 104531/4545 (6th Cir. September 10, 2012)

Text of the decision: Hotels.com L.P. [PDF 48 KB]

Summary

This case concerns alleged violations of local occupancy-tax laws by various online travel companies. The plaintiffs—cities, townships, and a county in the state of Ohio— sued various online travel companies, asserting that the online travel companies violated local tax laws by failing to pay a transient-occupancy tax on the difference between a contractually agreed-upon “wholesale” room rate, charged by the hotels to the online travel companies, and a higher “retail” rate charged by the online travel companies to the customers.


The localities seeking recovery each enacted a separate ordinance, regulation, or resolution imposing guest occupancy taxes.


The online travel companies filed a motion to dismiss. The federal district court granted the motion in part and denied the motion in part, determining that the online travel companies had no obligation to collect and remit guest taxes under any of the various guest tax laws at issue, but that the localities could still recover for any amounts the online travel companies collected as a tax but failed to remit to the localities.


After the partial dismissal, the only remaining claim concerned whether the online travel companies collected money as a tax without remitting the collected money to tax authorities. The federal district court granted the online travel companies’ motion for summary judgment, finding that the cities had not produced sufficient evidence to create a genuine issue of material fact as to whether the online travel companies collected taxes that were not remitted to the cities.


On appeal, the Sixth Circuit affirmed.




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