Who owed Florida transient-rental tax on a hotel voucher deposit retained by a reservation service?

Plain-English summary

The reservation service did not owe transient-rental tax when it sold the voucher, but the hotel had to collect tax on the full room rate, including the deposit retained by the service. The guest did not receive a right to occupy the room until presenting the signed voucher and paying the hotel.

The service reserved rooms at wholesale rates, collected an approximately $10 deposit for each night, issued the voucher, and kept the deposit as its commission. The voucher showed one total room rate split between the deposit and the balance due at the hotel. Because the deposit was consideration for the room within that total rate, its retention by the service did not remove it from the transient-accommodation tax base.

The hotel, as the party granting the room license, had to collect the applicable state tax and tourist development tax on the full rate. If the county self-administered its tourist development tax, the hotel remitted it to the county; otherwise it remitted under Chapter 212 procedures.

What this means for you

Splitting a room price between a booking intermediary and a hotel did not split the tax base. The ruling focused on who granted occupancy and what the guest paid in total for the room.

Common questions

Q: Was tax due when the service sold the reservation voucher? No.

Q: Was the retained deposit excluded from the room rate? No. It was included in the taxable total.

Q: Who collected the tax? The host hotel.

Q: Could the customer receive a deposit refund? Under the described voucher, cancellation by 2 p.m. on the reservation date allowed a refund from the service.

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 r. 12A-3.001 — tourist development tax administration
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-007

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-007
Florida Taxes Imposed on Transient Accommodations - Hotel
Booking Fees
Sections 125.0104(1),(2),(3),(10) and 212.03(1),(2), (3),
F.S.
Rule 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 31, 1995,
requesting the Department's issuance of a Technical Assistance
Advisement (TAA) pursuant to s. 213.22, F.S., and Ch. 12-11,
F.A.C., 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
11, 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, 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.

DISCUSSION OF FACTS

Your letter and supporting documents impart the following
information relevant to the issue under advisement herein:

[Taxpayer] brokers discounted room nights to tourists on
behalf of local host hotels. The host hotel agrees to
honor a preestablished wholesale net rate. [Taxpayer]
collects from guests a reservation deposit for each night
reserved. Nightly reservation deposit approximates $10.
[Taxpayer] retains the reservation deposit as its
commission. The guest is provided with a reservation
voucher which provides specific information such as guest
name and address, accommodation information, rate per
night, reservation deposit collected, and balance due.
Both the guest and [Taxpayer's] representative sign the
reservation voucher.

[Taxpayer] books the reservation through the host
reservation system. The reservation voucher is notated
with host confirmation number. The guest presents the
voucher to the host hotel at check-in. The guest is
responsible for paying the host hotel for all charges
incurred.

The sample "Wholesale Agreement" executed between Taxpayer
and the host hotel reveals the following pertinent provisions:

[TAXPAYER] will collect from GUESTS a Reservation Deposit
for EACH night reserved.

[TAXPAYER] shall book reservations through the HOST
reservation system and/or front desk staff BASED ON
AVAILABILITY.

The SAMPLE RESERVATION VOUCHER below shall be used by
[TAXPAYER] to refer GUARANTEED Reservations to HOST.

All Reservation Vouchers will arrive with a CONFIRMATION
NUMBER issued by HOST Reservation Agent.

[TAXPAYER] shall contact HOST on a daily basis for updates
on SPACE AVAILABILITY.

[TAXPAYER] may FAX Reservation Vouchers to HOST in the
event that GUEST cannot arrive with voucher.

Guests must sign these vouchers and HOST must fax these
signed vouchers to [TAXPAYER.

HOST agrees to check-in ONLY GUESTS who present a
reservation voucher or upon signing a faxed voucher.
(Emphasis Supplied)

The sample agreement contains a "Sample Reservation
Voucher." This voucher 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 reserved accommodations, the booking date, the
number of nights, the number of rooms, check-in and check-out
dates, and the guest's credit card information. The agreement
is signed by the guest and Taxpayer's reservationist.

The agreement also provides the following pertinent
provisions:

...To Insure Confirmation...Present This Voucher Upon
Arrival

RATE PER NIGHT @ $x ROOMS x __ NIGHTS FOR A TOTAL OF
$_
LESS RES. DEP. PD. @ $_X ROOMS x __ NIGHTS FOR TOTAL OF

$____
BALANCE DUE AT ACCOMMODATIONS ON ARRIVAL (Taxes & Extras
Not Included)

$____

IN THE EVENT OF CANCELLATION, YOUR RESERVATION DEPOSIT WILL
BE REFUNDED BY [TAXPAYER] (NOT AT HOTEL).

ALL CANCELLATIONS MUST BE MADE BY 2PM TO AVOID CHARGES TO
YOUR CREDIT CARD BY THE HOTEL.

Taxpayer has been advised by the XXX Comptroller's office
that the reservation deposit collected is subject to the Tourist
Development Tax. Based on the information contained in the
request, Taxpayer is collecting sales and use tax and the
tourist development tax and remitting these taxes to the
appropriate agencies.

REQUESTED ADVISEMENT AND TAXPAYER'S POSITION

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

It is your position that the reservation deposit is not
part of the rental proceeds and should be exempt from sales tax.
The reservation deposit only provides a guarantee to the hotel
guest that the room or rooms will be available at a
predetermined rate. You base your position on the fact that the
reservation deposit is paid to and retained by Taxpayer and not
paid to the hotel for the room rental. Thus, Taxpayer does not
receive any portion of the taxable rental proceeds.

Further, under the provisions of Rule 12A-1.001(17) now
(16), F.A.C., the transaction of booking the reservation for
the hotels is inconsequential to the sale of the hotel rooms and
the issuance of the reservation deposit does not constitute the
sale of tangible personal property. Therefore, the reservation
deposit is exempt from tax.

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) and (2), 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. The
same duties imposed by this chapter upon dealers in
tangible personal property respecting the collection and
remission of the tax; the making of returns; the keeping of
books, records, and accounts; and the compliance with the
rules and regulations of the department in the
administration of this chapter shall apply to and be
binding upon all persons who manage or operate hotels,...
and to all person who collect or receive such rents on

behalf of such owner or lessor taxable 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. (emphasis supplied)

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, F.A.C., provides:

(1) The provisions of Rule 12A-1.061, F.A.C., 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 "Wholesale Agreements" with host
hotels to reserve rooms for customers at a specified wholesale
room rate. Under the terms of the agreement, Taxpayer will
collect a "reservation deposit" for each night it reserves a
room for a customer and will issue a reservation voucher, as
specified in the agreement, to the customer. The customer is
required to sign the voucher and present it to the host hotel
when checking in at the host hotel. Taxpayer is required to fax
the signed voucher to the host hotel. The host hotel agrees to
only check-in customers who present the signed reservation
voucher.

On the face of the reservation voucher, the "rate per
night" includes both the "reservation deposit paid" and the
"balance due at accommodations on arrival." The reservation
deposit is paid to Taxpayer. Upon arrival at the host hotel,
Taxpayer's customer presents the voucher and pays the remaining
balance of the room rate to the hotel. In the event that
Taxpayer's customer cancels the room reservation by 2:00 p.m. on
the date of reservation, the customer 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 room rate
charged by the designated hotel is the rental consideration
received by the hotel. This amount includes the reservation
deposit paid to Taxpayer. 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 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. 35556