Tag Archives: motel

Senate Panel Kills Hotel-Motel Tax Bill

A Senate committee killed Wednesday a proposed change in the state’s hotel-motel tax statute that was depicted by opponents as tax increase and by proponents as closing a loophole.
Seven members of the Senate State and Local Government Committee voted against SB212, sponsored by Sen. Doug Overbey, R-Maryville. Only one, Committee Chairman Ken Yager, R-Harriman, voted for it.
The bill would apply hotel-motel taxes, collected by many city and county governments, to the price paid by the customer for a room. As things stand now, the tax is applied to the amount of money the motel owner receives for the room.
The difference between those two amounts is typically the fee charged by an online booking company, which, for example, may charge the customer $100 and remit $90 to the motel owner. A federal court decision last year interpreted the wording of current law to exempt the online booking companies’ fee from the tax.
Motels operators and local governments that benefit from the revenue – legislative staff estimates they would receive about $1.5 million in new revenue if the bill passed – support the measure. Online travel companies opposed it.

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Hotel-Motel Tax Revision Debate: An Increase or Closing a Loophole?

The state Senate’s Tax Subcommittee held hearings this week on a proposal to amend Tennessee’s hotel-motel tax law so that the companies take book reservations would be taxed on the fees they collect. A similar proposal failed last legislative session, but is returning under sponsorship of Sen. Doug Overbey and Rep. Art Swann, both Maryville Republicans who contend the measure basically closes a loophole and makes things fair. Critics say it’s a tax increase.
From the Nashville Business Journal report:
Hospitality officials are seeking to amend a hotel tax law and require online travel companies to pay more in taxes, a measure that would add more than $1 million to annual tax revenue.
The Tennessee Hospitality Association argues that online travel companies (OTCs) have a competitive advantage because they pay taxes on a discounted room rate rather than the retail rate.
Following a dismissal of a class-action case in U.S. district court filed by Goodlettsville against Priceline.com in February, the association is seeking to, as they see it, level the playing field by changing the language in the state law.
“It’s extremely unfair,” Greg Adkins, CEO of the association, said Tuesday at Tennessee’s Tax Subcommittee of Senate Finance Ways and Means Committee.
“The OTCs get off 20 percent cheaper than do brick and mortar hotels who actual employ the folks in Tennessee. Marriot.com does the same service, has the same marketing costs.” Officials representing the online travel companies said amending the tax language would be adding a new tax to e-commerce businesses.

Some See Tax Increases in Pending Legislation

Note: This is a column written for the Knoxville Business Journal
While hailing bills that cut taxes, state legislators are quietly pushing tax increases. At least, that’s the tale told by folks who would be paying the levies involved.
Proponents say they are merely correcting oversights. Deputy Comptroller Jason Mumpower says SB3296 may be seen as a “technical correction of a technical correction.” The measure undoes a change in the property tax treatment of solar energy companies that was part of the 2010 “technical corrections” bill from Gov. Phil Bredesen’s Department of Revenue.
“It very unusual that this was placed in the technical corrections bill to begin with,” Mumpower said, noting that such legislative packages generally focus on state levies, not local property taxes. Solar power enjoys a 100 percent sales tax credit and a 100 percent franchise and excise tax credit, Mumpower said.
His bill would tax solar installations similar to other “green energy” sites. The Tennessee Solar Energy Industries Association counters that the measure “would increase the appraised value of solar property (for tax purposes) from .5 percent to 33 percent of the original cost, resulting in an incredibly large and burdensome tax increase.”

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