The Wyoming Board of Equalization recently ruled that online travel booking companies must collect and remit sales tax on the entire amount charged for hotel room rentals in Wyoming. At the core of the dispute was the online booking companies' ("Companies") claim that they sell nothing more than non-taxable booking services. The Companies claimed that they were not actually selling hotel room rentals because they did not own the hotel rooms. Instead, they argued, they were selling non-taxable booking services, and, because they were not "vendors" of hotel room rentals, they had no obligation to collect and remit sales tax.
The Board of Equalization disagreed, finding that the Companies are vendors of hotel room rentals and are required to collect and remit sales tax. The Companies are selling a taxable service, a lodging service. The definition of "sale" is focused on the transaction; the tax is imposed on any transfer of possession for consideration. There is no requirement that the seller own the property or service being sold. The Board also focused on the business model the Companies use:the hotel owner does not know how much the customer paid, nor does the customer know how much the hotel received. Therefore, the Companies are the only party in the transaction that know how much tax should be paid.
The Board found that the Companies must collect tax on the entire amount charged, including the price for the room and their transaction fee. The definition of "sales price" includes all fees necessary to complete the sale. Since consumers cannot use the Companies service without paying their fees, the entire charge is taxable.