Denver’s lodging tax applies to online travel companies
In this week’s article, we examine the case of City and County of Denver v. Expedia, Inc., 2017 Colo. LEXIS 300 (Col. Sup. 2017) wherein the Colorado Supreme Court sitting en banc held that “Because the application of well-accepted aids to statutory construction leads to the conclusion that the fair and reasonable interpretation of Denver’s lodger’s tax article is that it imposes a duty on the OTCs to collect and remit the prescribed tax on the purchase price of any lodging they sell, to include not only the amount they have contracted with the hotel to charge and return but also the amount of their markup, the judgment of the court of appeals is revered”. We have previously discussed the issue of taxing OTCs in Internet travel transaction: Here comes the tax man, www.eturbonews.com (5/8/2014); Taxes on online travel companies in Hawaii, www.eturbonews.com (5/14/2015); Taxes on online travel companies: The fight against government, www.eturbonews.com (7/9/2015); Taxes on online travel companies in the District of Columbia, www.eturbonews.com (9/10/2015).
In Kershner, Deadly Violence Erupts in Standoff Over Mosque in Jerusalem, nytimes.com (7/21/2017) it was noted that “Six people were killed on Friday in an outbreak of violence that erupted over Israel’s placement of metal detectors at entrances to the sacred Aqsa Mosque compound in Jerusalem and spread to the West Bank. Three Israelis were killed in what appeared to be a terrorist attack in a West Bank settlement hours after three Palestinians were killed in clashes with Israeli security forces”.
In All those responsible for failed coup will be beheaded: Erdogan, travelwiremews.com (7/16/2017) it was noted that “Addressing a thousand-strong march on Saturday, Erdogan warned that his government was seriously mulling reintroducing the death penalty. “First of all we will chop off the heads of those traitors” he said.
Germans Urged To Stay Away From Turkey
In Kingsley & Eddy, Turkey’s Erdogan Refuses to Back Down in Feud With Germany, nytimes.com (7/21/2017) it was noted that “President…Erdogan of Turkey raised the stakes in a long running diplomatic spat with Germany on Friday, dismissing the threat of an informal German economic embargo and rejected calls to release several German citizens held in Turkish jails….The German foreign, finance and justice ministers advised Germans against traveling to or conducting business in Turkey…Germany is Turkey’s main trading partner, and more than 3.3 million German tourists visited Turkey last year”.
North Korea Travel Ban
In Sanger, U.S. to Bar Americans From Traveling to North Korea, nytimes.com (7/21/2017) it was noted that “The Trump administration said on Friday that it would bar Americans from traveling to North Korea, a month after the death of Otto F. Warmbier, a 22-year-old college student from Ohio who was arrested while trying to leave the country and returned to his parents, more than a year later, in a coma”.
Trump Travel Ban
In Liptak, Trump Refugee Restrictions Allowed for Now; Ban on Grandparents Is Rejected, nytimes.com (7/19/2017) it was noted that the “ The Supreme Court on Wednesday temporarily upheld broad restrictions against refugees entering the United States but allowed grandparents and other relatives of American residents to come while legal challenges to the Trump administration’s travel ban move forward”.
Free The Laptops, Please
In Chiem, Traveler Angst, New Protocols Free Airlines From Laptop Ban, law360.com (7/20/2017) it was noted that “Traveler pushback and pressure on the Trump Administration to be flexible on its border security demands, combined with the swift implementation by nine Middle Easter and African airlines of the government’s heightened screening procedures for U.S.-bound flights, likely propelled the lifting of a 4-month-old laptop ban, experts day”.
Two Large Bottles Of Wine, Please
In Fortin, Delta Passenger Restrained After Trying to Open Exit Door, Charges Say, nytimes.com (7/8/2017) it was noted that “A flight attendant smashed a large bottle of red wine over the head of a passenger on Thursday during a struggle to stop the man from opening an exit door…The Delta Air Lines flight, which departed from Seattle on route to Beijing had been in the air for about an hour when the man…who was seated in first class, made his way to the bathroom…As (Mr. X) wrestled with the door…two flight attendants tried to subdue him; (he) punched one of the attendants twice in the face. After a passenger jumped into the fray, it was (Mr. X) who went for the bottle of wine first, hitting the passenger ‘in the head with a red desert wine bottle’ the complaint said…Then a flight attendant, wielding two large bottles of wine, struck (Mr. X) with both, breaking one…The altercation ended when flight attendants, with help from passengers restrained (Mr. X) with zip ties”.
Fatal Tour Bus Crash
In Booth, Judge Orders $5M in Coverage for Fatal Bus Crash, newyorklawjournal.com (7/7/2017) it was noted that “A federal magistrate judge has ordered the distribution of $5 million in insurance coverage to the families of three people who died and to 42 others who were injured when their tour bus overturned in Delaware…News reports at the time described the accident as horrific, with passengers being ejected from the bus and being crushed. Many of the passengers…were foreign nationals who were in the United States on a sightseeing tour”.
United Wants To Sell Your Seat
In Ekstein, Now United wants to sell your seat to someone else for more, msn.com (7/13/2017) it was noted that “This week, United Airlines is quietly unveiling a new technology platform that it will use to manage the problem of oversold flights-and, in the same breath, turn them into a profit opportunity. With the help of its new Flex-Schedule Program, the airline is piloting a way to buck the trend of involuntary bumping…without necessarily offering four-figure payouts to passengers at the gates, or curbing the practice of overselling inventory…Instead it’ll simply offer buyouts earlier-up to five days in advance. The upside for United? The chance to resell your ticket at a wide profit margin”.
Biometric Identification, Please
In Vora, Airlines Try Biometric Identification for Boarding and Bags, nytimes.com (7/7/2017) it was noted that “Two United States air carriers, Delta Air Lines and JetBlue, recently began passenger trials in biometric identification, a technology that verifies a person’s identity through fingerprints, facial features and other physical characteristics…Fliers who choose to try it out step up to a camera at the boarding gate for a quick photo. This image is matched with passport, visa r immigration photos in the Customs and Border Protection database, and once flight details and identity are confirmed, a check mark appears on the camera and fliers can board the plane. So far, more than 90 percent of passengers (at the Logan International Airport test site) are using this self-boarding process…and if the trial is successful, the airline (JetBlue) plans to expand biometric identification to more flights”.
Delta Is Top Cash Cow
In Bachman, Why Delta Is Better at Taking Your Money, msn.com (7/14/2017) it was noted that “While all U.S. airlines have benefitted from consolidation and tame fuel costs, the biggest carriers have become the real cash cows…Currently, Delta Air Lines Inc. sits as king of the profit hill. The years of bankruptcies and bailouts are a distant memory. These days, cheap fuel and strong demand are pouring billions of dollars into airline coffers. Recently, the robust profits at Delta have surged, eclipsing its two legacy rivals…So what’s the secret sauce in Atlanta? According to analysts…One is a regional operation that sports higher fares-and profit margins-than the other two. It also helps that there’s less competition in Delta’s hubs and that it keeps a sharp eye on revenue generation. But it’s that regional segment where Delta seems to be reaping the most benefit relative to its rivals”.
Airlines At War, Bring It
In Zhang, It’s war: American Airlines cuts ties with 2 of its biggest rivals in hugh airline dispute, businessinsider.com (7/14/2017) it was noted that “American Airlines announced its decision to sever its code-sharing agreements with Etihad and Qatar Airways…The cancellation of the agreements, which allows the airlines to sell tickets on one another’s flights as if they were their own, comes amid a tense dispute between US airlines and their Middle Eastern rivals over allegations of illegal subsidies. On Thursday, American confirmed that Qatar Airways intended to continue its plan to acquire an unsolicited equity stake in the airline”.
Hotels Need A Personal Touch
In Luongo, Hotels Train Workers in the Personal Touch, nytimes.com (7/10/2017) it was noted that “Technology, some hotels are finding, has its limits. ‘Technology cannot hug as repeat guest’…That is the reason his company,, which manages several hotels, has been running a training program for some of the managers and other staff members to improve their hospitality skills, connect with local business leaders and learn more about local tourist offerings”.
Hyatt Customers Sue
In Hanson, Hyatt Customers Seek Class Cert. Over Receipts, law360.com (7/10/2-17) it as noted that “Hotel customers suing Hyatt Corp. for allegedly printing too much information on their credit card receipts (in violation of) the Fair and Accurate Credit Transactions Act (FACTA)”.
Business Travelers Love Airbnb
In Airbnb and Concur expand partnership to Airbnb listings within Concur Travel, travelwirenews.com (7/14/2017) it was noted that “Concur, an SAP company and the world’s leading provider of travel, expense and invoice management solutions, announced the availability to view and book Airbnb listings embedded within Concur Travel…The tighter integration will deliver greater flexibility for businesses to offer alternative lodging choices to business travelers within their existing travel management program…Airbnb usage continues to show strong growth over time, with the number of business travelers expensing Airbnb accommodations increasing by 33% year-over-year in Q2 2017. In fact, employees from more than 250,000 companies in over 200 countries and territories use Airbnb for work”.
Chinese Straddling Bus Kaput
In Ramzy & Zhang, China’s Vision for a Straddling Bus Dissolves in Scandal and Arrests, nytimes.com (7/4/2017) it was noted that “Maybe a giant tram rolling over pesky cars clogging the streets wasn’t the answer to China’s traffic congestion woes. A Chinese inventor’s plan to develop such a vehicle, called a ‘traffic-straddling bus’ has been effectively killed afer 32 people from an investment company that backed the project were arrested. The bus was designed to ride on tracks, but with its body elevated so that two lanes of traffic could pass underneath. Some 1,200 passengers were to have ridden between specialized stops”.
Let Nomads Roam, Please
In Myers, China Is Challenged on Bid for Unesco Heritage Status in Tibetan Area, nytimes.com (7/6/2017) it was noted that “An international advocacy organization is challenging China’s effort to secure special recognition from the United Nations Educational, Scientific and Cultural Organization for a vast, traditionally Tibetan region, arguing that the designation would disrupt the lives of nomads who have roamed its fragile lands. Te region, known as Hoh Xil or Kekexil, is part of the high-altitude plateau in Qinghai Province and is twice the size of Belgium”.
Unchain The Elephants, Please
In Thousands of elephants exploited for tourism held in cruel conditions, www.eturbonews.com (7/7/2017) it was noted that “Riding an elephant is one of the most popular tourist activities in Asia. World Animal Protection investigated the conditions endured by 2,923 elephants at tourist venues in Thailand, Sri Lanka, Nepal, India, Laos and Cambodia and found that 77% of them were treated appallingly…When not giving rides or performing, elephants are typically chained day and night, often to chains less than ten feet long. They are also fed poor diets, given limited veterinary care and are frequently kept on concrete floors in stressful locations near loud music, roads or visitor roups”.
EU Passenger Rights Improved
In European Court of Justice Strengthens passenger rights regarding cancellation fees, www.eturbonews.com (7/7/2017) it was noted that “International passenger rights groups welcome the decision of the European Court of Justice to strengthen passenger rights regarding cancellation fees. Airlines are not entitled to charge extra for the reimbursement of personal taxes and fees since the reimbursement is nothing but fulfilling legal requirements. Furthermore, airlines are obliged to provide a transparent overview of taxes, airport charges and other fees… According to European Union legislation, airlines are obliged to provide an overview of the costs, including taxes and fees. Extra costs that add up to the ‘basic fee’ for noting but the flight sometimes result in cost explosions. ‘Airlines are required to break down the costs and give a more transparent overview. What seems a bargain at first sight is often a really costly flight once all the add-ons are included’, says Sandra Rosenberg”.
Planning For “Long-Term Travel”
In Lee, How to Conquer the Challenge of Long-Term Travel, nytimes.com (6/19/2017) it was noted that “‘Long-term travel is an exercise in letting go of exact to-do lists, planning moment to moment and controlling the entire process’, said Jodi Ettenberg, who has been traveling and writing at her site, Legal Nomads, since 2008….Here then are some tips to help the traveler who set out for a long stretch, whether it is country-hopping or spending extended time in a specific spot overseas. Begin With a Budget and Set Priorities…Find Reliable Wi-Fi…Don’t Forget Travel Visas…Assess Your Insurance Needs…Learn to Sleep Anywhere…Educate Yourself on the Food Environment…Avoid Foreign Transaction Fees (and) Plan Not to Have an Airtight Plan”.
Trump Hotels And Sabre Data Breach
In Posses, Trump Hotels, Google Caught Up in Sabre Data Breach, law360.com (7/5/2017) it was noted that “Trump Hotels guests and Google staffers were among those affected by a breach targeting a Sabre Hospitality Solutions electronic reservation system that serves thousands of travel agencies and hotels, compromising payments card data and other sensitive information, according to letters sent by the companies. Google Inc. learned in mid-June that Sabre had discovered unauthorized access to an internal account in its SynXis Central Reservations System-which is utilized by Carlson Wagonlit Travel, a travel provider Google employees use-affecting the names, contact information and payment card data associated with some reservations in the system between Aug. 10 and March 9, according to a letter filed with the California attorney general on June 29″.
In Hackers stole guests’ credit card numbers from Trump Hotels for months, travelwirenews.com (7/12/2017) it was noted that “Cyber-thieves gained access to guests’ credit card details for eight months’ worth of reservations made at President Donald Trump’s luxury hotel chain . Hackers attacked 14 properties but were unable to breach internal systems, the hotel said…Trump Hotels did not mention in its notice how many guests were affected in the cybersecurity attack”.
Uber Should Be Governed By Taxi Rules
In Tsang, Uber Is Dealt a Fresh Blow in European Legal Case, nytimes.com (7/4/2017) it was noted that “Uber suffered a blow to its expansion plans in Europe on Tuesday afer a senior adviser to the region’s highest court said that the ride-hailing service should have to abide by tough rules governing taxi services. The recommendations, a nonbinding opinion by an advocate general for the Court of Justice of the European Union, adds to an array of challenges that Uber is facing worldwide. This year alone, the company has grappled with a sexual harassment scandal and the resignation last month of its chief executive, Travis Kalanick”.
Uber’s Questionable Tax Calculations
In Scheiber, How Uber’s Tax Calculation May Have Cost Drivers Hundreds of Millions, ntyimes.com (7/5/2017) it was noted that “Drivers’ trip receipts contain signs that the ride-hailing service deducted hundreds of millions of dollars from driver’s earnings in New York to pay state taxes. Amid the turmoil that resulted in Travis Kalanick’s stepping down…as chief executive, the company announced a series of changes in late June aimed at improving its drivers’ work experience, including a new tipping option in its passenger app. But even as Uber makes a concerted effort to win over drivers, it has not acknowledged all the ways it may have squeezed them in New York State…The following are signs that the ride-hailing service improperly deducted what could amount to hundreds of millions of dollars from drivers’ earnings to pay taxes, under New York State law, (which) are technically due from passengers”.
London’s Cabby Wars
In Bennhold, On London’s Streets, Black Cabs and Uber Fight for a Future, nytimes.com (7/4/2017) it was noted that “London’s cabby wars are less about the disruptive power of an app, or a new business model, than about the disruption of Britain…London’s cabby wars echo the culture wars that fueled Britain’s vote last summer to leave the European Union-and that have brutally flared up again in recent weeks: immigrant versus native, old versus new, global versus national. London’s black cabs trace their lineage to 1634. To earn a badge, cabbies spend years memorizing some 25,000 streets and 100,000 landmarks for ‘The Knowledge’, the world’s toughest taxi exam. Most cabbies are white and British. Uber arrived in 2012…but its 40,000 drivers already far outnumber the city’s 21,000 traditional cabbies. They use satellite navigation to find their way around. Most of them are nonwhite and many…are immigrants. Uber fares are about 30 percent lower than those of black cabs-a discrepancy that cabbies say signals a deliberate attempt to kill of their trade. ‘London without black cabs…would be like London without Big Ben’”.
Uber’s Pricing Model Class Action
In Chiem, Drivers Slam Uber’s Bid To Duck Pricing Model Class Action, law360.com (7/5/2017) it was noted that “A driver who launched a proposed class action alleging Uber breached its contract with drivers by stiffing them on fares with its so-called upfront pricing model urged a California federal judge Monday to reject the rise-hailing giant’s bid to toss the suit, saying the agreement at issue is unambiguous. Plaintiff Martin Dulberg filed a brief opposing (Uber’s) recent motion to dismiss his suit alleging that drivers have been shortchanged on fares-a percentage of which they’re promised in their driver agreements with the company-after Uber switched to a so-called upfront pricing model in the fall of 2016″.
Rowdy Renters Behave, Please
In Simpson, Airbnb Turns Blind Eye To Rowdy Renters, LA Landlords Say, law360.com (7/5/2017) it was noted that “A group of apartment complex owners in Los Angeles have filed a putative class action against Airbnb alleging rowdy guests are costing them money and disturbing long-term tenants…The suit…claims the landowners have had problems with Airbnb guests and that when they notified the company that their clients were violating California state laws and their lease agreements, which do not allow sublets, Airbnb did not take action”.
Side Hustles Don’t Pay Well
In Bhattarai, Side hustles are the new norm. Here’s how much they really pay, washingtonpost.com (7/3/2017) it was noted that “The ‘gig economy’ popularized by the likes of Lyft, Airbnb and TaskRabbit, has for years been promoted as an effective way for Americans to make money on their own terms. But new data show that the majority of workers-85 percent of them-make less than $500 a month, on average, using those services. The home-sharing site Airbnb yielded the highest monthly return to its users, with a median income of $440, more than double the $210 a month earned by the median Lyft driver, according to San Francisco-based loan provider Earnest, which analyzed tens of thousands of loan applications to study the impact of gig-economy jobs. (Earnings on other popular platforms included a monthly median of $40 on craft-selling site Etsy, $70 on delivery app Postmates, $110 on services marketplace TaskRabbit and $155 on ride-sharing app Uber).”.
Yelp Review Not Libel
In Crescendo Designs, Ltd. v. Reses, 2017 NY Slip Op 05198 (2d Dept. 2017) the Court stated that “After plaintiff installed a custom home theater system in the defendant’s home, the defendant posted a review of the services she received from the plaintiff on the Internet website Yelp.com. The plaintiff commenced this action, alleging, among other things, that the review constituted libel per se…A ‘libel action cannot be maintained unless it is premised on published assertions of fact’…Whether an allegedly defamatory statement constitutes actionable fact or nonactionable opinion is a question of law to be resolved by the courts,,,Here, given the context in which the challenged statements were made and viewing the content of the review as a whole, a reasonable reader would have believed that the writer of the review was a dissatisfied customer who utilized the Yelp website to express an opinion”. Complaint dismissed.
Travel Law Case Of The Week
While the Colorado Supreme Court sitting en banc found that OTCs must pay Denver’s lodging tax, the Court’s analysis of terms such as “lodging”, “merchant-model transactions”, “vendor” and how OTCs actually function in the sale of accommodations is instructive.
“By contrast with the term ‘furnish’, the term ‘lodging’ is expressly defined as a term of art, and that definition similarly makes clear that furnishing lodging refers to selling, or providing for consideration, ‘the right to use, posses, or occupy qualifying accommodations’. While the definition might have been phrased more felicitously in terms of the overnight use of certain rooms or accommodations…There can be no serious question that ‘lodging’ does not refer to a room, as a commodity, or even title or a right f ownership of a room, but rather to the right of overnight use of rooms meeting all the specifications of the definition. Because only the right to overnight use of rooms can be furnished and acquired for consideration without removing the transaction from the definition of ‘lodging’ altogether, furnishing lodging for consideration necessarily refers to selling, or providing for consideration, the right to overnight use of rooms or accommodations in the enumerated hotel-like facilities”.
“Although the OTCs maintain that even in merchant-model transactions they do not sell, or furnish for consideration, a right to occupy or use the hotel room s in question, no matter what terminology they may choose to use in describing heir transactions, as a functional matter that is precisely what they do…However characterized, virtually every aspect of the merchant-model transaction objectively places the OTC in the role of ‘vendor’. The OTC deals directly in the transaction with the consumer-purchaser. The OTC sets the price, or consideration, without the payment of which, the OTC will not sell the consumer the right to use the room; the OTC collects the amount of that purchase price directly from the consume; and the OTC adds to the purchase price an amount it determines to be sufficient for the lodger’s tax. Whether or the particular room is specified at that point, in accepting the purchase price the OTC sells a reservation for a room of particular specifications to a consumer, and by its arrangement with the hotel, the hotel becomes contractually obligated to the OTC to provide the consumer with a room meeting those specifications”.
Not Mere Intermediaries
“Although the OTCs may choose to characterize themselves as mere intermediaries in a transaction between the hotels and the consumers, their relationship with the hotels is clearly not one remotely resembling an agency relationship. The OTCs are not employed by the hotels nor are they paid a fee, or commission, by the hotels for arranging reservations, as in the traditional agency model. The obligations of the OTCs and the hotels to each other are purely contractual in nature and to the extent the purchaser of lodging acquires rights from the hotel, as at most as a third-party beneficiary of the contractual arrangement between the hotel and OTC/ Whoever may actually hand the purchaser the key, the lodger is the purchaser in a transaction of sale with the OTC”.
Not Wholesale Purchases
“By the same token, however, although the OTCs pay an amount that is set by the hotels to them for each room reservation the OTCs make, and contractually retain the right to change more in their subsequent sales to lodger-purchasers, neither are their arrangements with the hotels in the nature of wholesale purchases. The OTCs’ separate transactions, first with the hotels and then with lodgers, are not in the nature of wholesale and retail sales for the simple reason that the OTCs never acquire the right to occupy or use the rooms in question. They merely contract for the authority to sell to consumers, or lodgers, the right to occupy or use rooms, in agreed upon numbers or as available, at a price largely of their own choosing, in exchange for an agreement to return a specified amount to the hotels for each reservation not timely cancelled. If the OTCs actually purchased the right to occupy or use the rooms at a wholesale rate and resold that right at a retail rate, in the absence of some other provision in the tax code as provided by various commodity sales, the first sale would itself be a taxing event, with a second sale resulting in at least partial double taxation”.
Privity Of Contract
“The lodger-purchaser in the transaction is in privity of contract with the OTC, not the hotel. By virtually all objective criteria, the contract for sale of the right to use a hotel accommodation is entered into by the OTC and purchaser, at the time of the OTC’s acceptance by receiving payment of the amount it charges for the reservation . There is of course nothing improper in attempting to structure transactions to the advantage of one’s clients, and within ethical limits, that is precisely what lawyers are typically retained to do. But labeling alone is insufficient to alter the structure of the transaction…If tax obligations are imposed on the basis f function, then objective criteria establishing the functional relationships involved in any particular transaction must be determinative of the relative tax obligations. Any fair and reasonable interpretation of the city lodger’s tax article categorizes the OTC in a merchant-mode; transactions, according to the objective criteria of the article’s definitions, as the vendor, with the obligation to collect and emit a lodger’s tax to the city”.
The OTC Markup
“In the typical merchant-model transaction, as described for purposes of those proceedings, the OTC’s markup is not distinguished in the billing process from the amount to be returned to the hotel at all, much less charged as a separate fee for informational and online services. However, whether or not such a fee could be objectively justified in terms of the service provided, because the purchaser has no option to decline it in making his purchase of lodging from the OTC, and it is therefor inseparable from he selling price of the lodging, it is directly connected with, in the sense that it is necessarily included in, that selling price”.
“When the related provisions and interlocking definitions of the lodger’s tax article are considered as a harmonious whole, the conclusion that the OTC’s markup must be included in the purchase price paid or charged for lodging is not only one reasonable construction of the article: it is sufficiently apparent that it is the fair and reasonable construction embodying to legislative intent”.
The author, Thomas A. Dickerson, is a retired Associate Justice of the Appellate Division, Second Department of the New York State Supreme Court and has been writing about Travel Law for 41 years including his annually updated law books, Travel Law, Law Journal Press (2016), Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2016), Class Actions: The Law of 50 States, Law Journal Press (2016) and over 400 legal articles many of which are available at nycourts.gov/courts/9jd/taxcertatd.shtml. For additional travel law news and developments, especially, in the member states of the EU see IFTTA.org
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