Travelocity.Com LP v. Wyoming Department of Revenue
329 P.3d 131
Wyo.2014Background
- Wyoming Department of Revenue directed online travel companies (OTCs) to collect and remit tax on the full amount customers pay for Wyoming hotel reservations.
- OTCs appealed to SBOE, which upheld the Department’s position that OTCS are vendors taxed on the full amount.
- OTCs challenged under Dormant Commerce Clause, Equal Protection, Due Process, and Internet Tax Freedom Act.
- District court certified the case for direct Supreme Court review under Wyoming rules; this Court accepted certification.
- OTCs’ business models include merchant and opaque models, where a markup or service fee is charged and not taxed separately from the room rate.
- Wyoming statutes tax the “sales price paid for living quarters” and permit local lodging taxes; the question is whether the OTC markup is part of the sales price and thus taxable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OTCs are vendors under Wyoming law so the full amount is taxable | OTCs are not vendors; hotels provide lodging, not OTCS. | Statutes tax the sales price for lodging; OTCs collect tax on the full amount. | OTCs are vendors; full amount taxed. |
| Dormant Commerce Clause compliance of taxing the full amount | Taxing the markup discriminates against interstate commerce. | Tax applies to the Wyoming lodging transaction; nexus exists. | Tax satisfies the Complete Auto four-part test; no Dormant Commerce Clause violation. |
| Equal Protection implications of taxing the full amount | Wyoming entities using merchant model not similarly taxed. | No Wyoming entities use the merchant model; no disparate treatment. | No equal protection violation; no similarly situated Wyoming comparator evidence. |
| Due Process concerns about vagueness of tax statutes | Statutes are vague re: service/markup taxation. | Statutes are clear; department procedures exist for clarification. | Statutes not impermissibly vague; adequate notice and interpretive framework. |
| Internet Tax Freedom Act validity | Taxation of online intermediaries differently than non-internet brokers. | Same tax applies to transactions regardless of medium; no discrimination. | No ITFA violation; no differential treatment shown. |
Key Cases Cited
- Travelscape, LLC v. S.C. Dep't of Revenue, 391 S.C. 89 (S.C. 2011) (state tax on gross proceeds; service fees taxable as part of gross proceeds)
- City of Charleston v. Hotels.com, LP, 520 F.Supp.2d 757 (D.S.C. 2007) (tax on amount charged to visitors; focus on transaction recipient)
- Pitt Cnty. v. Hotels.com, L.P., 553 F.3d 308 (4th Cir. 2009) (OTCs taxed as vendors; payments to hotels; nexus principles)
- Louisville/Jefferson Cnty. Metro Gov't v. Hotels.com, L.P., 590 F.3d 381 (6th Cir. 2009) (nexus and tax on gross proceeds in hotel bookings via OTA)