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PBC tax collector gets tough in collecting bed tax owed for vacation rentals, sues online firms

Palm Beach County Tax Collector Anne Gannon filed suit this week against four online travel companies, alleging they have not been paying the county’s tourist development tax on vacation rentals they book.

Gannon alleges that the companies, including Air BNB Inc., HomeAway Inc., TripAdvisor LLC, and CouchSurfing International Inc., failed to register as rental dealers and did collect or remit the required taxes for short-term rentals they booked of private homes.

The “bed tax” of 5 cents per dollar is levied on all hotel stays and vacation rentals of 6 months or less. The money it generates helps market the county as a tourist destination.

The county collected more than $30 million in tourist taxes last fiscal year. About 95 percent of that money came from hotels and motels, officials said.

Tourist Development Council Executive Director Glenn Jergensen on Tuesday praised Gannon’s efforts to increase collections, saying it was important that all rental and hotel owners pay their fair share.

“The key is to make sure we are collecting from everyone,” Jergensen said.

Gannon’s suit, filed Monday in Palm Beach County Circuit Court, alleges that the companies use various websites to market and collect money for short-term stays at private homes in Palm Beach County. The suit alleges that state law requires the person or company “receiving the consideration” for the short-term lease or rental to collect the tourist taxes and remit them to the county.

Gannon said Tuesday that is unclear exactly how much money Palm Beach County may be owed by the companies. She said her office has spent about three years building its case against the companies, and has been aggressive in its efforts to boost bed tax collections here.

“This is a big business,” Gannon said.

In 2012, more than a dozen online travel companies, including including Expedia, Orbitz and Travelocity, agreed to pay the county $1.9 million to settle a similar lawsuit. Gannon’s office filed suit against the companies in 2009, alleging they were not giving the county all of the tourism taxes they collected for hotel rooms they booked here.

The companies, Gannon’s office alleged in the 2009 suit, reserved hotel rooms in bulk at wholesale fees. But tourists who use the Web sites to book their hotel stays paid a much higher rate, and that’s the rate on which they paid fees and taxes.

Gannon alleged that the companies turned over taxes only on the wholesale room rates, if they paid them at all.

Just before reaching the settlement in 2012, Gannon’s office also increased its efforts to catch landowners who rent their property but don’t pay the county’s tourist tax.

Gannon said her staff has been canvassing the county and going neighborhood to neighborhood looking for condominiums and vacation rental properties.

Over a roughly 45 day period, her staff was able to register 15 new rental dealers in the Wellington area. Those landlords and property managers will now be required to remit monthly tourist tax payments to the county.

“We have gotten very aggressive,” Gannon said.

Gannon said her office also plans to take legal action against property managers and landlords who do not submit detailed information about each individual tax transaction, including the length of stay and the property’s address.

Palm Beach Post Staff Writer Emily Roach contributed to this report.

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