Florida: Short-term Rental Platforms Are Not Subject to Local Tourist Development Tax

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A Florida Court of Appeals recently addressed whether operators of online platforms used to facilitate booking short-term rental accommodations were required to collect and remit Florida’s tourist development tax (TDT). The TDT is imposed and administered by numerous Florida localities. The platform operators advertised and listed properties, provided a messaging system between accommodations owners and customers, and processed payments. None of the platform operators had any possessory interest in the rental properties, nor were they a party to the rental agreements between the owners and guests. Under Florida law, the TDT is imposed on “every person who rents, leases or lets for consideration any … accommodation.” The tax base is the amount “charged by the person receiving the consideration for the lease or rental.” A dealer, defined as the “person that leases or grants a license to use, occupy, or enter upon the … accommodations” is required to register to collect the TDT. On appeal from a trial court ruling in the operators’ favor, the Palm Beach County Tax Collector argued that (1) the platform operators were exercising the privilege of renting, leasing, or letting of accommodations and (2) even if the operators were not exercising this privilege, they were dealers required to collect and remit because they collected payment on behalf of the owners.

The court held that the operators were not subject to the TDT because they lacked a possessory interest in the listed properties. Citing to a Florida Supreme Court case addressing online travel companies, the court noted that to rent, lease or let a property denotes that such person has sufficient control over the property to grant a guest possessory or use rights. In the court’s view, the operators were “simply conduits” through which guests could compare properties and book a reservation.  With regard to the tax collector’s second argument that the operators were dealers required to register, the court disagreed. The discussion centered around language in the TDT ordinance (and corresponding state law) saying that “persons receiving” rental and similar payments are required to register and remit the tax on such payments and a Florida administrative regulation requiring agents and representatives of owners of rented property to register and remit tax on any payments received on behalf of the owner. Beyond its holding that the platforms were not dealers, the court further held that the operators were not agents of the owners in this instance because the terms and conditions of the operators’ contracts with the owners expressly limited the operators’ role to collecting payment from the customer and remitting it to the owner. The relationship did not bestow on the operators the power to act as the owners' agent for purposes of exercising the taxable privilege of renting. As such, they were not considered “dealers” required to register.  For more information on Gannon v. Airbnb, Inc, please contact Adam Raschke at 813-301-2239.

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