2014 WY 43
Wyo.2014Background
- Wyoming Department of Revenue required on-line travel companies to collect and remit tax on the full amount paid by customers reserving Wyoming hotel rooms.
- OTCs argued Wyoming tax only applies to the net room rate, not the markup labeled as a service or facilitation fee.
- SBOE upheld the Department’s position, determining OTCs are vendors and the full amount is taxable.
- The dispute centers on whether the markup is part of the sales price of lodging services or a separate taxable service fee.
- OTCs’ customers and servers largely operate outside Wyoming; hotels in Wyoming supply the lodging and related services.
- The district court certified the case for direct Supreme Court review under Wyoming rules; the Supreme Court affirmed SBOE.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are OTCs vendors taxable on the full amount paid for Wyoming lodging? | OTCs contend the markup is a service fee, not part of lodging tax base. | Statutes tax the sales price for lodging; OTCs are vendors and taxable on full amount. | Yes; full amount taxed; OTCs are vendors. |
| Does taxing the full amount violate the Dormant Commerce Clause? | Taxing the markup burdens interstate commerce via offshore servers and out-of-state transactions. | Nexus and apportionment satisfy Complete Auto; internal and external consistency maintained. | No; four-factor Complete Auto test satisfied; no Dormant Commerce Clause violation. |
| Does the tax on the full amount offend equal protection? | Travel intermediaries are taxed differently from OTCs under similar models. | No Wyoming entities use the merchant model; no discriminatory treatment shown. | No equal protection violation. |
| Is the tax imposition on the full amount consistent with due process? | Statutes are vague and fail fair notice for the discount and service fee distinction. | Statutes are sufficiently clear and can be clarified by the Department if needed. | No due process violation; statutes sufficiently clear. |
| Does the Internet Tax Freedom Act prohibit the tax on the full amount? | Taxing internet-based travel facilitators differently harms online commerce. | Lodging tax applies uniformly regardless of booking method; no differential treatment found. | No ITFA violation. |
Key Cases Cited
- Travelscape, LLC v. S.C. Dep’t of Revenue, 705 S.E.2d 28 (S.C. 2011) (tax on gross proceeds upheld; services incidental to lodging taxed)
- Louisville/Jefferson County Metro Gov’t v. Hotels.com, 590 F.3d 381 (6th Cir. 2009) (nexus and tax on hotel-related transactions upheld)
- Amazon.com LLC v. N.Y. State Dep’t of Taxation & Finance, 877 N.Y.S.2d 842 (N.Y. Sup. Ct. 2009) (affiliate-based nexus and in-state sales force for tax purposes)
- Overstock.com, Inc. v. N.Y. State Dep’t of Taxation & Fin., 987 N.E.2d 621 (N.Y. 2013) (affiliate programs create in-state presence for tax purposes)
- Scripto, Inc. v. Carson, 362 U.S. 207 (U.S. 1960) (agency nexus and physical presence for taxation)
- Tyler Pipe Indus., Inc. v. Wash. State Dep’t of Revenue, 483 U.S. 232 (U.S. 1987) (attributional nexus and market presence as nexus standard)
- Jefferson Lines, Inc. v. Oklahoma Tax Comm’n, 514 U.S. 175 (U.S. 1995) (internal/external consistency in multistate taxation)