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County to look at bed tax payouts, online travel sites

By Staff | Jun 24, 2009

The Lee County Attorney’s Office is planning on launching an investigation into online travel sites for not properly paying bed taxes to the county.
Attorney David Owen told commissioners that four other Florida counties are entering into a lawsuit against online travel providers to investigate the same possible infractions.
Those counties include Leon, Pinellas, Bay and Collier, although Collier officials are undecided about joining the group.
Owen cited a recent ruling in the Georgia Supreme Court that set a precedent for this type of action.
The supreme court ruled that Atlanta and Columbus, Ga., were underpaid by online travel sites as the sites based their payments on wholesale rates as opposed to retail rates for travel packages.
That is the issue facing Lee County commissioners and county attorney staff.
“We need to get into this game fairly quickly,” Owen said. “And each county needs to be looked at individually.”
The statute of limitations on the case goes back three years, though the Lee County Attorney’s Office is not venturing a guess as to how much bed tax has been lost over that period.
Andrea Fraser, deputy county attorney, said the purpose of the lawsuit is not to recoup back bed tax, only to affect future legality.
“This is not a class action lawsuit, not yet, but it has the potential to become one,” she said.
The local bed tax is 5 percent on every hotel room night sold in Lee County.
Traditionally, the bed tax has been used for beach and shoreline maintenance, as well as tourism driven construction projects.
More recently, the bed tax has been partially redirected to help pay for the forthcoming Boston Red Sox stadium.
Owen explained to commissioners that much like the ruling in Georgia, Lee County needs to clarify how taxes should be paid by the online companies. He asked whether they should pay bed tax on the retail cost, or the discounted bulk rates at which they buy the rooms.
Owen cited the following example: if an online service buys a room at $50 and rents it for $80, how much should it pay?
“Is the bed tax paid on the $80, or the $50? That what we need to find out,” he said.
Commissioners unanimously voted to investigate the possible infractions.
Commissioner Bob Janes was not present Tuesday.