Was a hotel reservation service's per-night voucher fee separately taxable from the room rental?

Plain-English summary

The booking service did not collect transient-rental tax when it sold the voucher, but the hotel had to tax the full gross room rate, including the $10 per-room-night deposit retained by the service. The voucher itself did not give the guest a right to occupy a room; that right arose at the hotel.

The service recorded the gross rate, deposit, balance, tax, and hotel confirmation on the voucher. Its hotel agreement stated that the deposit was credited against the gross rate and that the hotel collected tax on the gross amount. The Department said retaining the deposit as the service's compensation did not remove it from the taxable room price.

The hotel was the party granting the room license and therefore collected state and applicable tourist development taxes. The local tax went to a self-administering county when its ordinance required local collection; otherwise Chapter 212 administration applied.

What this means for you

A hotel intermediary's separately retained fee could still be part of the room's taxable gross charge when the agreement and voucher treated it as a credit against that price.

Common questions

Q: Did voucher sale itself grant hotel occupancy? No.

Q: Was the $10 deposit part of the taxable room rate? Yes.

Q: Who collected the tax? The hotel.

Q: Were all deposits refundable? No. The first night was nonrefundable; later nights could be refunded under the stated 4 p.m. cancellation term.

Citations and references

• Fla. Stat. § 212.03(1)–(3) — transient-accommodation tax
• Fla. Stat. § 125.0104(1)–(3) and (10) — tourist development tax
• Fla. Admin. Code rr. 12A-1.061(2), (3), and (5) and 12A-3.001 — transient rentals and tourist development tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-008

Original ruling text

SUMMARY

QUESTION: Is the sale of a reservation voucher to purchase
transient rentals at a discounted rate from a Taxpayer who
provides reservation services taxable?

ANSWER - Based on Facts Below: No sales tax or other
locally imposed transient rental taxes is due on the sale
of a reservation voucher by the Taxpayer. The guest,
utilizing the Taxpayer's reservation services, does not
obtain the right to the use of the reserved hotel room
until the voucher is presented to the hotel. The amount of
the reservation deposit paid to Taxpayer is included in the
total room rate charged by the hotel and is subject to the
taxes imposed on transient accommodations. The hotel is
required to collect the applicable taxes on the total room
rate charged to a guest.

Mar 01, 2000

Re: Technical Assistance Advisement 00A-008
Florida Taxes Imposed on Transient Accommodations Hotel
Booking Fees
Sections 125.0104(1),(2),(3),(10) and 212.03(1),(2), F.S.
Rules 12A-1.061(2),(3),(5) and 12A-3.001, F.A.C.
Taxpayer: XXX ("Taxpayer")
FEI No.: XX
Sales Tax Nos.: XX

Dear:

This response is to your petition of July 26, 1995,
requesting the Department's issuance of a Technical Assistance
Advisement (TAA) pursuant to s. 213.22, F.S., and Ch. 12-11,
FAC., regarding the referenced Taxpayer and matter. The
Department has carefully examined your request and supporting
documents and finds them to be in order.

The Department informed you in our letter dated September
12, 1995, that it would not issue a response on this matter
until the matter pending before the Circuit Court of Orange
County, Florida, in Florida's Room Service. Inc.. v. Department
of Revenue, Case No. 95-302, under litigation in the Circuit
Court of Orange County, Florida (9th Circuit), had been
resolved. On July 28, 1998, a Final Order of Dismissal (Written
Stipulation for Settlement) was executed. Therefore, the
Department is hereby issuing the requested TAA.

Your letter provides that Taxpayer collects a hotel
reservation fee for booking guests for certain hotels. Taxpayer
provides the hotel guests with a reservation voucher, and
collects a reservation deposit for each night reserved at the
time a reservation is made. Taxpayer retains the reservation fee
as payment for its service to the hotel. The guest presents the
voucher to the hotel when he or she checks in and is responsible
for all charges incurred at the hotel. If the guest cannot or
does not use all or part of the room nights reserved, Taxpayer
will refund the reservation deposit to the guest.

The sample reservation voucher enclosed with your petition
has space for Taxpayer to record the name, address, and
telephone number of the guest information, and the reservation
information. The reservation information includes the name of
the hotel or resort, the number of rooms, the number of nights,
the rate per room, the arrival date, the "reservation deposit,"
the "balance due per night + tax," "confirmation," and the date
of the booking. The sample voucher also contains a statement
instructing the recipient to present the voucher to insure
reservation confirmation.

The sample agreement executed between Taxpayer and the
hotel provides the following pertinent provisions:

The following hotel agrees to allow [Taxpayer] to sell
rooms at the net rates listed below.

All guest reservations will be called in prior to arrival,
and they will arrive with vouchers, paying the above
mentioned net rate plus tax on the gross rate. Hotel is

responsible to remit tax on gross rate to taxing authority.
[Taxpayer] will collect a deposit per night (which is
credited to the gross rate quoted to the customer) upon
making the reservation. The net rate, to the hotel, is paid
upon arrival and is guaranteed at time of reservation by
credit card. All reservations are subject to availability.
Rates are flexible and may vary as conditions/occupancy
warrant. Hotel will remit deposit amount to [Taxpayer] if
guest extends while in house.

E. (GROSS) RATE + TAX = RESERVATION FEE + BALANCE DUE PER
NIGHT

F. RESERVATION FEE: Deposit collected up front.
[Taxpayer] pays the agent's commission and all costs
out of this fee. The resort does not have to pay
commissions or get involved in any billing because
this is collected in advance - $10.00 for every
roomnight booked.

G. BALANCE DUE PER NIGHT: This is the net rate that the
property expects per roomnight and is paid by guest
upon arrival. Property collects tax on the gross rate
(rate plus deposit/fee).

REQUESTED ADVISEMENT AND TAXPAYER'S POSITION

At issue is whether the reservation deposit collected by
Taxpayer is subject to the taxes imposed on transient
accommodations.

It is your position that Taxpayer is not in the business of
renting, leasing or letting any living quarters or sleeping or
housekeeping accommodations as provided in s. 212.03(1), F.S.
Taxpayer does not receive or collect rent for any hotel.
Taxpayer merely sells a voucher for $10 per room night, which,
when delivered to the designated hotel, entitles the purchaser
to a "credit against the discounted gross room rate that the
hotel has agreed to give such voucher holders." The fact that
the fee is entitled a "deposit" and is paid before the purchaser
shows up at the hotel does not change the substance of the

transaction. The rental of a hotel room does not occur until the
guest presents the voucher at the hotel.

It is also your position that Taxpayer is not a dealer as
defined in s. 212.06, F.S. Taxpayer does not lease or grant a
license to use any rental facility. Taxpayer only has the
authority under its agreement with the hotel to deliver to the
customer "a voucher for a credit against a discounted gross room
rate." Any contract or agreement to rent is with the hotel, not
Taxpayer.

Your petition also provides the following pertinent
discussion regarding your position that the hotels are the
proper parties to collect the appropriate taxes:

A taxing authority has the burden of proof in any action
involving taxing statutes, the tax statues themselves are
construed strictly against the taxing power, and any doubts
are to be resolved in favor of the taxpayer. See Department
of Revenue v. Quotron Systems, Inc., 615 So.2nd 774 (Fla.
3rd D.C.A. 1993). The Florida Statues simply do not impose
liability upon a seller of a voucher or a privilege to
obtain a reduced gross room rate; a right to rent at a
discounted gross rate cannot be converted into the receipt
of rent before that right is exercised, and it is exercised
only at the hotel; any inference that Florida law imposes
such liability is forced and, at best, ambiguous. If the
legislature wished to cover such sales of vouchers, it
could have specifically included them in its definitions.
[Taxpayer] is not contending that once a consumer uses his
voucher to rent at or from the hotel directly that tax is
not due on the total amount paid by the consumer for the
rental; the tax is due, however, from the lessor hotel.
This is so not only because the agreement between
[Taxpayer] and each hotel requires the hotel to pay the tax
on the gross amount paid by the tenant, but also because
without the act by the tenant of going to the hotel and
using the voucher (or guaranteeing the payment of the net
amount by a credit card), the agreement to rent has not
been fully made; both acts are transactions with the hotel,
not with [Taxpayer].

STATUTORY AND ADMINISTRATIVE AUTHORITY

The following sections of the Florida Statutes (F.S.) and
the Florida Administrative Code (F.A.C.) establish the tax
liability of dealers granting a privilege to use or occupy
living quarters such as hotel rooms.

Florida Sales and Use Tax

Section 212.03(1), (2), and (3), F.S., sets forth the
legislative intent to tax transient rentals and provides in
pertinent part:

(1) It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of renting, leasing, letting, or granting a
license to use any living quarters or sleeping or
housekeeping accommodations in, from, or a part of, or in
connection with any hotel, apartment house, roominghouse,
or tourist or trailer camp.... For the exercise of such
taxable privilege, a tax is hereby levied in an amount
equal to 6 percent of and on the total rental charged for
such living quarters or sleeping or housekeeping
accommodations by the person charging or collecting the
rental....

(2) The tax provided for herein shall be in addition to the
total amount of the rental, shall be charged by the lessor
or person receiving the rent in and by said rental
arrangement to the lessee or person paying the rental, and
shall be due and payable at the time of the receipt of such
rental payment by the lessor or person, as defined in this
chapter, who receives said rental or payment. The owner,
lessor, or person receiving the rent shall remit the tax to
the department at the times and in the manner hereinafter
provided for dealers to remit taxes under this chapter....

(3) When rentals are received by way of property, goods,
wares, merchandise, services, or other things of value, the
tax shall be at the rate of 6 percent of the value of the

property, goods, wares, merchandise, services, or other
things of value.

Local Option Tourist Development Tax

Section 125.0104(1), (2)(a) and (3)(a), F.S., provides the
application of the Local Option Tourist Development Tax as
follows:

(1) SHORT TITLE. This section shall be known and may be
cited as the "Local Option Tourist Development Act."

(2) APPLICATION; DEFINITIONS.-

(a) Application. - The provisions contained in chapter 212
apply to the administration of any tax levied pursuant to
this section.

(3) TAXABLE PRIVILEGES; EXEMPTIONS; LEVY; RATE.

(a) It is declared to be the intent of the Legislature that
every person who rents, leases, or lets for consideration
any living quarters or accommodations in any hotel,
apartment hotel, motel, resort motel, apartment, apartment
motel, roominghouse, mobile home park, recreational vehicle
park, or condominium for a term of 6 months or less is
exercising a privilege which is subject to taxation under
this section, unless such person rents, leases, or lets for
consideration any living quarters or accommodations which
are exempt according to the provisions of chapter 212.

(b) Subject to the provisions of this section, any county
in this state may levy and impose a tourist development tax
on the exercise within its boundaries of the taxable
privilege described in paragraph (a) .... (emphasis
supplied)

Section 125.0104(10)(a)1. and 2., F.S., provides:

(10) LOCAL ADMINISTRATION OF TAX.-

(a) A county levying a tax under this section ... may be
exempted from the requirements of the respective section
that:

1. The tax collected be remitted to the Department of
   Revenue before being returned to the county; and

2. The tax be administered according to chapter 212, if the
   county adopts an ordinance providing for the local
   collection and administration of the tax.

Section 125.0104(10)(c), F.S., provides:

(c) A county adopting an ordinance providing for the
collection and administration of the tax on a local basis
shall also adopt an ordinance electing either to assume all
responsibility for auditing the records and accounts of
dealers, and assessing, collecting, and enforcing payments
of delinquent taxes, or to delegate such authority to the
Department of Revenue. If the county elects to assume such
responsibility, it shall be bound by all rules promulgated
by the Department of Revenue pursuant to paragraph (3)(k),
as well as those rules pertaining to the sales and use tax
on transient rentals imposed by s. 212.03....

Rule 12A-3.001, FAC., provides:

(1) The provisions of Rule 12A-1.061, FAC., Rentals,
Leases, and Licenses to Use Transient Accommodations,
govern the administration of the tourist development tax in
all situations, except those in which rules have been
issued by this chapter to clarify statutory provisions
specifically applicable to the tourist development tax.

(2) Every person required to be registered with the
Department of Revenue under Rule 12A-1.061, F.A.C., is
exercising a taxable privilege when engaging in the
business of renting, leasing, letting, or granting licenses
to others to use transient accommodations within any county
imposing the tourist development tax.

(3) With the exception of filing estimated sales tax, the
provisions contained in Chapter 212, F.S., apply to the
administration of any tourist development tax levied under
s. 125.0104, F.S. Unless a county electing to selfadminister the tourist development tax has adopted
guidelines for registration and reporting requirements
consistent with the provisions of Chapter 212, F.S., the
provisions for registration and reporting contained in Rule
12A-1.056, F.A.C., Tax Due at Time of Sale; Tax Returns and
Regulations, and Rule 12A-1 .060, F.A.C., Registration,
apply to the administration of any tourist development tax.
(emphasis supplied)

DISCUSSION AND DETERMINATION

Taxpayer enters into agreements with hotels to reserve
hotel rooms for guests at a specified discounted rate. Under the
terms of the agreement, Taxpayer will collect a "reservation
deposit" for each night it reserves a room for a guest and will
issue a reservation voucher, as specified in the agreement, to
the guest. The guest is required to sign the voucher and present
it to the designated hotel when checking in at the hotel.

Taxpayer records the "gross rate," the "reservation
deposit" and the "balance due per night + tax on gross rate" on
the face of the reservation voucher. The reservation deposit is
paid to Taxpayer. Under the terms of the agreement with the
designated hotel, the guest presents the voucher and pays the
remaining balance due, plus tax on the gross room rate, to the
hotel. The reservation for the first night is non-refundable. In
the event that the guest cancels the room reservation by 4:00
p.m. on the subsequent reservation dates, the guest may obtain a
refund of the reservation deposit from Taxpayer.

Any person granting a license to use any living quarters or
sleeping accommodations in connection with any hotel is
exercising a taxable privilege under the provisions of s.
212.03(1), F.S. The guest reserving a room by utilizing
Taxpayer's reservation services does not obtain the right to the
use of the reserved hotel room until he or she presents the
voucher to the hotel and pays the remaining room rate to the

hotel. Therefore, it is the hotel, not Taxpayer, that is
granting licenses to use hotel rooms and exercising a taxable
privilege as provided in s. 212.03(1), F.S.

The total rental charges or room rates include the total
consideration received solely for the right to the use of the
hotel room. (s. 212.03(1), F.S., and Rule 12A-1.061(2)(e),
F.A.C.) As indicated on the reservation voucher, the gross room
rate charged by the designated hotel is the rental consideration
received by the hotel. This amount includes the reservation
deposit paid to Taxpayer. The agreement executed by the hotel
and Taxpayer provides that the hotel is responsible to remit tax
on the gross rate to the taxing authority. Taxpayer is only
authorized by the hotel to collect a deposit. It is irrelevant,
for purposes of s. 212.03(1), F.S., that Taxpayer retains the
reservation deposit as payment for its reservation services
provided to the designated hotel. Therefore, under the plain
language of s. 212.03(1), F.S., the reservation deposit paid to
Taxpayer is included in the total room rate charged by the
designated hotel and is subject to the taxes imposed on
transient accommodations. The hotel is required to collect the
applicable taxes on the total (gross) room rate charged to the
guest.

Section 125.0104, F.S., establishes the tourist development
tax, a local option tax adopted at the individual county's
discretion. Section 125.0104(3)(a), F.S., provides that every
person who rents living quarters or accommodations in a hotel
"for a term of six months or less" must pay the tourist
development tax in counties that have adopted it, unless such
rentals are exempt under Chapter 212, F.S. According to the
statute, the tourist development tax is imposed "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." (s. 125.0104(3)(e), F.S.)

Every person that provides transient accommodations within
a county imposing the tourist development tax is required to
register and collect that tax at the rate imposed by that
county. Section 125.0104(10)(a), F.S., provides that a county
may collect the tourist development tax directly if it enacts an

ordinance "providing for the local collection and administration
of the tax." If the county in which the host hotel is located
has such an ordinance, the host hotel should remit the tax to
that county. Otherwise, under Chapter 212, F.S., the tax should
be remitted directly to the Department of Revenue.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request
and related backup documents are public records under Chapter
119, F.S., which are subject to disclosure to the public under
the conditions of s. 213.22, F.S. Your name, address, and any
other details which might lead to identification of the taxpayer
must be deleted by the Department before disclosure. In an
effort to protect confidential information, we request you
notify the undersigned in writing within 15 days of any
deletions you wish made to the request, your backup materials or
the response.

Sincerely,

Janet L. Young
Tax Law Specialist

JLY/pb
Control No. 35555