US Court of Appeals for the Fifth Circuit Opinions
City of San Antonio, Texas v. Hotels.com, L.P.
Opinion Date: November 29, 2017
Judge: Rhesa Hawkins Barksdale
Areas of Law: Government & Administrative Law, Tax Law
The hotel occupancy tax applies only to the discounted room rate paid by the online travel company (OTC) to the hotel. The Fifth Circuit vacated the district court's judgment in a class action asserting that the service fee an OTC charges for facilitating a hotel reservation was included in the "cost of occupancy", and thus subject to the municipalities' hotel occupancy tax ordinances. The court applied City of Houston v. Hotels.com, L.P., 357 S.W.3d 706, 707, and held that OTCs in this case were not liable because the only monetary amounts at issue in this class action were those not included in the scope of the hotel occupancy tax base. The Houston court explained that, under the plain meaning of the ordinance, the cost of occupancy was the amount for which three conditions were satisfied: the consideration at issue must have been paid or charged for the use or possession, or the right to use or possess, a hotel room; the amounts to be taxed must have been paid by the occupant of such room; and the amount to be taxed must have been paid to such hotel. Therefore, the court rendered judgment for the OTCs in this case.
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