The Wyoming Supreme Court recently ruled that online travel companies must collect Wyoming sales tax on the total amounts collected from customers for booking hotel rooms in Wyoming.
The online travel companies (OTCs) hosted travel websites through which customers can book hotel rooms. The OTCs charged their customers for the hotel's rate, the amount of tax on the hotel's rate, and a "service" charge. The OTCs did not collect tax on the service fee. Under the hotels' contracts with the OTCs, the hotels must provide lodging to OTC customers.
Tax applies to the sales price paid for living quarters in hotels, motels, and similar establishments. The sales price is the total amount of consideration for which services are sold, including charges for services necessary to complete the sale. The vendor must collect tax and remit it to the state. A "vendor" is a person engaged in the business of selling taxable services, admissions, or tangible personal property. A taxable "lodging service" is the provision of sleeping accommodations to transient guests.
The OTCs argued that they did not "provide" sleeping accommodations because they did not own the hotel rooms. The Court ruled that the OTCs did provide sleeping accommodations because they sold the right to occupy the hotel rooms. It did not matter that they did not own the hotel rooms themselves. Because the OTCs provided sleeping accommodations, they sold a taxable service and had to collect the tax. The service charge was part of the taxable sales price because customers had to pay the service charge to get a room though an OTC. The service charge was therefore necessary to complete the sale and subject to tax.