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Expedia v. Florida: Claims of Harassment And Privilege in Online Booking Tax Brawl

| November 10, 2011

They must be booking their next vacation. Rep. Rick Kriseman, D-St. Petersburg, is at left. Others, from left, are Rep. Mary Brandenburg, D-Palm Beach; Anthony Sasso III, D-Cocoa Beach; and Rep. Jaun-Carlos Planas, R-Miami. (Meredith Hill)

With the House raising arguments about separation of powers, a Leon County circuit judge is expected to allow only limited questioning of Rep. Rick Kriseman in a court battle about the hotel taxes paid by online-travel companies.

Expedia last month subpoenaed Kriseman and an aide to give depositions about their roles in distributing potentially damaging company documents to House members and the news media.

But the House last week filed an emergency motion to try to block the depositions or to limit the questions that could be asked. House officials said after a hearing Wednesday that Leon County Circuit Judge Terry Lewis sharply limited the possible questions, though a written order has not been finalized.

Kriseman, a St. Petersburg Democrat who argues that Expedia and other online-travel companies do not pay the full amount of required hotel taxes, said the depositions are an attempt to harass and intimidate him.

“There is no information that I can provide to them that they don’t already have,” he said by telephone after the hearing.

The subpoenas are part of a long-running legal fight in which Broward County is seeking to collect millions of dollars in hotel taxes from Expedia and other online-travel companies. Other counties have pursued similar claims, and the controversy has spilled into the Legislature.

The companies, which serve as middlemen between hotels and travelers, charge customers for room rentals and fees for providing the service. The lawsuits center on whether tourist-development taxes should apply to the total costs, or as the companies argue, only to the amounts that pay for room rental.

Kriseman drew attention in May when he received Expedia documents that had been unearthed in a Georgia lawsuit and e-mailed them to all other House members and to at least two news organizations. Jon Moyle, an attorney for Broward County, passed along the documents to Kriseman as the House prepared to vote on a bill aimed at shielding the online-travel industry from the disputed taxes.

The documents, which include opinions from attorneys and accountants, could be used to argue that Expedia knew as early as 2003 that it should pay the disputed taxes.

Broward County attorneys have sought to use the documents in the lawsuit but have drawn fierce opposition from the company, which argues the internal communications are confidential and “privileged” material that cannot be used in the case.

Lewis has agreed the documents are privileged but has not determined whether that privilege has been waived — which could allow them to be used in the case — because of their distribution, according to court records.

The Republican-controlled House filed an emergency motion Oct. 31 to try to quash Expedia’s subpoenas of Kriseman and his district secretary, David Flintom. As an alternative, the House said Lewis could place strict limits on the types of questions Expedia would ask during the depositions.

House General Counsel George Levesque argued in the motion that lawmakers cannot be forced to testify about issues in the legislative process, except in some criminal matters.

“Failing to protect members of the legislature and their staff from intrusive depositions that are prompted by their actions connected with their legislative role and duties would impair the ability of a co-branch of government from conducting its business and have a chilling effect on a legislator’s advocacy on behalf of constituents,” the motion said.

But Expedia fired back Monday by saying the documents are privileged and that it should be able to examine how Kriseman received the material and the actions that he and his staff took.

“The testimony Expedia seeks is relevant, and the excuses offered by the House simply do not stand up to scrutiny,” Expedia argued in a court document.

Katie Betta, a spokeswoman for House Speaker Dean Cannon, said in an e-mail after Wednesday’s hearing that Lewis directed Levesque to write a proposed order that would limit the questioning of Kriseman and Flintom. Lewis ultimately would sign off on that order.

Betta said the questioning would be limited to information that online-travel companies provided to Kriseman or his aide.

–Jim Saunders, News Service of Florida

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4 Responses for “Expedia v. Florida: Claims of Harassment And Privilege in Online Booking Tax Brawl”

  1. palmcoaster says:

    Expedia and any other Internet reservation web site materialized in Florida, should pay the local sales and TDC taxes, as any other hospitality business has to comply as well. Representative Kriseman on right track. Also the all Cruise Lines operating in Florida Ports, should pay taxes as they are not, right now. We need that revenue….

  2. Jim N says:

    I wondered about this issue and this article does shed some light. From the article the dispute is not over whether EXPEDIA pays the TDC taxes it is about ,”Do they pay enough”. The argument is if Expedia advertizes a room at say 175.00 per night, but only pays $50.00 night. @ the 175.00 rate if TDC taxes are 10% then the TDC fee is 17.50, however if Expedia only pay’s $50.00 per night then the TDC is $5.00.

    If that scenario is true then I side with Expedia. Government should not be able to tax full retail, if you buy an item on sale or at a discount. if Florida does not like it then they can change the methodology of the tax structure to a flat rate per room per night, or a flat charge of per night per square footage of the room, but to come back and say well you owe us the whole $17.50 is wrong. This precedent could then be applied to new cars, and other tangibles that you pay taxes on.

    I think they are being grubby about this. Why no crackdown on yard sales and flea markets? All of those are supposedly taxable sales? It is so obvious anymore, you can find the tax cheats… They are the nes that want to know if there is a discount for cash….

  3. palmcoaster says:

    Jim here is your answer. These online companies should pay tax in what they charge to the tourist not on the special discounted rates they get from wholesale bookings. We all have to pay taxes on the total rate of what is ultimately sold not at what price we buy the goods. Why should they be exempted? See next paragraph and link”.
    “The main contention is that an online booking company only pays the bed tax on the negotiated room rate and not on the rate the company charges the customer. The company calls the additional money a fee for their service not actually part of the room rate.
    For example, an online booking company buys a $150 room for say, $90 and then adds on a service fee and sells the room for say, $100. The bed tax applied to the room charge is based on the $90 rate, not the $100 cost to the client because the booking company says that is their service fee.”
    http://staugustine.com/opinions/2011-02-22/our-view-state-needs-fix-bed-tax-law-room-rates
    Many of these online reservations also hold paying back these hotels and other hospitality businesses up to 30, 60, 90 days their funds collected from tourist stays, further profiteering from those funds interest. Some had to be taken to court to be forced to pay up for the given hotel/s that serviced them.
    When it comes to Cruise Lines not currently paying taxes in Florida, is just a matter of corporate welfare force subsidized by the Floridian tax payer. http://www.floridatoday.com/article/99999999/NEWS01/512110306/Cruise-lines-skirt-U-S-tax-labor-laws
    Feel free to google these issues and your will be shocked!

  4. JimN says:

    Thanks,
    I agree if they charge the customer $100.00 then they should pay the tax on $100.00.
    The service fee if listed separate on the invoice at the time of purchase would in my opinion be exempt unless it is a specifically taxed labor.

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