Online Travel Companies (OTCs) Tax Parity Issue
June 17, 2015
Dear WH&LA Lodging Member:
An issue, initially behind the scenes under consideration within the state budget, is gaining traction and exposure as the week winds down at the Capitol.
It is an issue also moving around other states in various legislative efforts and being tested in the judicial system that has to do with Online Travel Companies (OTCs) paying state and local taxes just on the discounted "wholesale rate" they pay to lodging properties, while lodging properties are paying taxes on the full "retail" rate paid by the guest. Because of this difference in taxes paid on the same room, states are becoming more upset about the lost state sales tax revenue, counties with a sales tax are beginning to see what they are missing, and municipalities and CVBs and chambers of commerce are becoming upset on lost local room tax revenue.
Earlier this week, WH&LA issued a memo of support to Joint Finance Committee, when asked by the sponsor of a proposal to change the process to require OTCs to pay taxes on the retail rate that the guest pays for their overnight stay, just like lodging properties do. Today WH&LA prepared a Tax Parity on Wisconsin Overnight Stays overview to help anyone less familiar with this issue to better understand the issues at hand and why an increasing number of tourism industry businesses, state, county, local governments, and CVBs and chambers of commerce would like to see a change.
We understand that tomorrow a team of lobbyists from Travel Tech, the national organization representing the OTCs, will be going to Madison to reinforce the opposition they already noted in correspondence to the Joint Finance Committee. This is a strong lobby from powerhouse OTCs, that other states have been somewhat overwhelmed by at their state capitols.
This Tax Parity proposal is still under consideration by Joint Finance, and has not yet been voted on for inclusion in the state budget. Once we learn the extent of their efforts and what the legislators promoting it will need, we will get back to all of you if your voices are needed. We already have offers from the American Hotel & Lodging Association and one of the largest hotel companies to assist us when needed, so hopefully by early next week we will know more. At this point, we just want you to be aware of the issue and to vocalize your support as you feel is appropriate if the issue comes up locally.
Thank you for your continued interest and support.
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