Matt Boch Comments on Taxability of Accommodations Rented Through Online Travel Companies

A class action suit filed in 2011 by local Arkansas governments will proceed after the Arkansas Supreme Court declined to block the plaintiffs from seeking further damages.

The core issue at the center of Pine Bluff Advertising and Promotion Commission v. LP, is the taxability of accommodations rented through online travel companies (OTCs). Tax Notes reports the local governments argue, “that the OTCs are liable for local accommodation taxes and the gross receipts tax on the rental of accommodations on the marked-up room rates.”

Member Matt Boch provided comment saying the trial court decision should trouble Arkansas taxpayers because by treating “the question of whether OTCs’ fees were subject to tax as a deduction/exemption to be construed against the taxpayer rather than a question of taxability to be construed against the government,” the court misapplied the state’s canons on construction for tax statutes.

“The OTCs’ recent Petition raised good points about how avoiding damage claims had helped them maneuver procedurally to stay in court,” Boch said, agreeing with Justice Josephine Hart’s dissenting opinion that allowing the damage claims was “manifestly unfair given the prior proceedings.”

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