ROBINSON v. PRICELINE COM (2024)

Writ application denied.

I agree with the denial of the writ applications filed by the plaintiff taxing authorities in these matters and concur to opine on the issues presented as this matter has generated significant interest as reflected by the number of amicus filings.¹ The writ applications in these consolidated matters require consideration of whether the portion of the amount collected from customers by a facilitator for the purchase of a hotel room above the rate actually charged by hotels (and related sales tax), which represent fees for the services rendered by the facilitating entity, are subject to sales tax. Although this court has not ruled on the precise issues presented in these cases, this court has considered similar issues in the context of a “sale at retail” in relation to an online marketplace facilitator of sales made by third-party retailers in Normand v. Wal-Mart.com USA, LLC, 19-00263 (La. 1/29/20), 340 So.3d 615. Notably, many of the issues that were considered by the first circuit in these matters were previously ruled on by a different appellate court in Lopinto v. Expedia, Inc. (WA), 21-132, p. 10 (La.App. 5 Cir. 12/23/21), 335 So.3d 432. Writs were not applied for with this court in Lopinto. The two appellate court decisions are consistent in their holdings that the services provided by online facilitators of the purchase of hotel rooms do not qualify as “sales of services” as defined by La. R.S. 47:301(14)(a) and that such facilitation entities are not “dealers”; therefore, the facilitation fees charged by facilitation entities are not subject to sales tax. For the following reasons, I agree with these findings.

Although there are valid arguments as to why facilitation fees should be taxable, the sales tax laws as they are currently written do not provide for such a result. In 2016, the legislature amended La. R.S. 47:301(4) and La. R.S. 47:301(6)(a) to expand the taxability of certain services by broadening the definitions of “dealer” and “hotel,” respectively. See 2016 La. Act, 1st Ex. Sess, 17. As amended in 2016, La. R.S. 47:301 in pertinent part provides:

(4) “Dealer” includes every person who manufactures or produces tangible personal property for sale at retail, for use, or consumption, or distribution, or for storage to be used or consumed in a taxing jurisdiction. “Dealer” is further defined to mean:

․

(f)(i) Any person, who sells or furnishes any of the services subject to tax under this Chapter.

(ii) Under guidelines enacted by the Legislature of Louisiana during the 2016 Regular Session, any person engaged in collecting the amount required to be paid by a transient guest as a condition of occupancy at a residential location as provided for in R.S. 47:301(6)(a)(ii).

(iii) For purposes of this Chapter, dealer shall not include persons leasing apartments or single family dwellings on a month-to-month basis.

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(6)(a) “Hotel” means and includes any establishment or person engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests, where such establishment consists of sleeping rooms, cottages, or cabins at any of the following:

(i) A single business location.

(ii) A residential location, including but not limited to a house, apartment, condominium, camp, cabin, or other building structure used as a residence.

(iii) For purposes of this Chapter, hotel shall not mean or include any establishment or person leasing apartments or single family dwelling on a month-to-month basis.

․

As a result of the amendments, the services provided by entities “or persons engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests” “where such establishment consists of sleeping rooms, cottages, or cabins at ․ a residential location, including but not limited to a house, condominium, camp, cabin, or other building structure used as a residence,” such as AirBnB, are now subject to sales tax. These definitional provisions have not undergone further change and are currently in effect today.

As observed by the appellate court in the instant case, concerning the imposition of sales tax, La. R.S. 47:302(C)(1) provides: “There is hereby levied a tax upon all sales of services, as herein defined, in this state, at the rate of two percent of the amounts paid or charged for such services.” Clearly, under La. R.S. 47:302(C)(1), not all services are subject to sales tax; only those services that are included in the definition of “sales of services” found in La. R.S. 47:301(14) are subject to sales tax. In pertinent part, “[t]he furnishing of sleeping rooms, cottages or cabins by hotels” is a taxable “sale[ ] of service[ ].” La. R.S. 47:301(14)(a). This definition cannot be expanded by agency regulations. See L.A.C. 61:I.4301(C),”Sales of Services,” (b) & (c)² (mandating that when nontaxable items are lumped with charges for taxable services, the entire lump sum is subject to sales tax.).³ As observed by the appellate court in this case, “nontaxable services provided by a third party, like the facilitation services provided by [the facilitators] herein, do not become taxable because they are billed with taxable services.” See Robinson v. Priceline.com, Incorporated, 23-0069, p. 24 (La.App. 1 Cir. 4/17/24), 389 So.3d 168, 184 (citing Enterprise Leasing Co. of New Orleans v. Curtis, 07-0354, pp. 8-9 (La.App. 1 Cir. 11/2/07), 977 So.2d 975, 980, writ denied, 07-2320 (La. 2/1/08), 976 So. 2d 719) (which recognized that transportation fees incurred in the lease of tangible property or sale of aggregate material are not subject to sales tax although invoiced with taxable events, as they are not “part of” the taxable events.).

As previously stated, the defendants in this case are online facilitators of the purchase of hotel rooms. Under what is referred to as “the merchant model,” the facilitators enter “into contracts with individual lodging places wherein the parties agreed on a ‘Wholesale Rate’ for the rooms and the defendants acquired the right to display, offer, and facilitate reservations of the rooms to the public at a higher ‘Retail Rate.’ ” Robinson, 23-0069 at 4, 389 So.3d at 172. Pursuant to the contracts, sales tax on the wholesale rate (as opposed to the retail rate) is collected from the customer by the facilitators and forwarded to the lodging places after the customer's stay (along with the wholesale rate amount) to be remitted by the lodging places to local and state taxing authorities. See Id., 23-0069 at 4 & 7, 389 So.3d at 172 & 174. Under the law and the contract, it is the lodging places-dealers from which the taxing authorities shall collect sales taxes. See La. R.S. 47:302(C)(2), which provides:

The tax levied in this Section shall be collected from the dealer, as defined herein, shall be paid at the time and in the manner hereinafter provided, and shall be in addition to all other taxes, whether levied in the form of excise, license, or privilege taxes, and shall be in addition to taxes levied under the provisions of Chapter 3 of Subtitle II of this Title [La. R.S. 47:341 et seq.]. [Footnote omitted.]

The taxing authorities contend that the facilitators “collected taxes from the consumer based on the ‘Retail Rate’ ” that were improperly retained by the facilitators. See Robinson, 23-0069 at 4, 389 So.3d at 172. Evidence presented at trial shows two charges-one for the room and the other for “Taxes & Fees.” The customer's room charge is based on the retail rate, which consists of the wholesale rate and a facilitation fee for the services rendered by the facilitators. Id., 23-0069 at 6, 389 So.3d at 174. Similarly, the charge for “Taxes & Fees” does not specify what portion of the charged amount is for taxes and for fees.⁴ Although the amounts for the two invoiced charges are not itemized on the customer's invoice, the evidence shows that the customer is advised by the facilitators in multiple ways of the components to the charges. As recognized by the appellate court:

Informational pop-ups as well as Expedia's terms and conditions explain the components to the charges. The retail room rate is a combination of (1) the net rate the hotel charges for occupancy of the room, and (2) a facilitation fee retained by Expedia for its services in facilitating the reservation. The “Taxes & Fees” are (1) a recovery of the estimated taxes the hotel will be responsible for on the net rate, and (2) a service fee retained by Expedia as additional compensation for its services. The disclosures in the confirmation email match those made to the traveler in the booking path itself, before the traveler's decision to book a reservation.

Id., 23-0069 at 7, 389 So.3d at 174.

As found by the lower courts in this case, under La. R.S. 47:301(14)(a), only a hotel's “furnishing of sleeping rooms” qualifies as “sales of services” and are subject to sales tax. The “sleeping rooms” are furnished by the lodging places and not the facilitators. The services provided by the facilitators (which do not qualify as “hotel[s]” under La. R.S. 47:301(6)(a)(i)–quoted supra) do not fall with the definition of “sales of services” under La. R.S. 47:301(14)(a); therefore, the facilitation services provided by the facilitators are not taxable “sales of services” under La. R.S. 47:301(14)(a).

As an alternative argument, the taxing authorities argue that by virtue of the services rendered by the facilitators they qualify as “dealer[s]” under the law and are thus responsible for collecting and remitting taxes to the taxing authorities on the fees paid for their facilitation services. See La. R.S. 47:301(4)(f)(i), which states that a “dealer” is “[a]ny person, who sells or furnishes any of the services subject to tax under this Chapter.” Although the facilitators do not directly “furnish[ ] sleeping rooms,” the taxing authorities maintain that the facilitators’ services involve the sale of something-“[t]he furnishing of sleeping rooms ․ by hotels” and, thus, fall with the definition of a “dealer,” which is responsible for collecting and remitting sales taxes under La. R.S. 47:302(C) on their facilitation fees to the taxing authorities.⁵ The fallacy in that argument is that the taxability of the service provided by the facilitators still turns of whether the service falls within La. R.S. 47:301(14)(a)’s definition of “sales of services,” as it is only on those services that a taxing authority may collect sales taxes from the dealer. See La. R.S. 47:302(C)(1) & (2) (quoted supra).

The “dealer” is “sell[er] or furnishe[r]” of the service, here, “[t]he furnishing of sleeping rooms.” See La. R.S. 47:301(4)(f)(i). The general sales tax provisions in La. R.S. 47:302(C)(2) (quoted supra) require “the dealer” “sell[ing] or furnish[ing]” the “sales of services” to collect the tax from the customer. See also La. R.S. 47:337.17(A)(1) & (2).⁶ The references to “the” dealer (as opposed to “a” dealer) in Sections 302(C) and 337.17(A)(1) and (2) indicate that the legislature contemplated that there can only be one dealer relative to “sales of services” required to collect sales tax from the customer. See Normand, 19-00263 at 18, 340 So.3d at 626. In the “sales of services” involving “the furnishing of sleeping rooms,” “the dealer” is the lodging place, the third-party hotel that actually provides the services ultimately sought by the customer - the right to access, use, or occupy a hotel room. Accordingly, the underlying taxable transaction involves the “furnishing of sleeping rooms” by the lodging places. Whether the taxable service in question is being sold and/or furnished in this instance, it would be the lodging places that perform that/those act(s) relative to the “sales of services.” The facilitators’ contractual undertaking to collect the taxes owed under the law and to send them to the actual dealers for remission to the taxing authorities does not make the facilitators dealers.

In the context of “sales of services,” as nonparty to the underlying sale transaction - “furnishing of sleeping rooms,” a facilitator is neither a “hotel” nor a “dealer” under La. R.S. 47:301(6)(a) or La. R.S. 47:301(4)(f)(i) relative to sleeping rooms being furnished by the third-party hotels;⁷ therefore, the facilitators were not obligated under the general statutory tax scheme to collect and remit sales tax to the taxing authorities. Based on the terms of the facilitators’ contract with lodging places, the facilitators, although obliged to collect the sales taxes from customers on behalf of the lodging places, did not contractually assume the tax obligation of the hotels for their “sales of services.”

If this writ were granted, I would affirm the majority decision of court of appeal.

I agree with Chief Justice Weimer's concurrence noting the magnitude of the issues presented which require the attention of the legislature. I write separately to state that I also agree with the court of appeal's well-reasoned opinion finding that facilitation fees charged by online facilitators are not subject to sales tax under the statutes as presently written. Notwithstanding the correctness of the appellate court's decision, I also would have voted to grant these applications but for the Governor's intention to call an upcoming special session to consider tax matters.

FOOTNOTES

1.   Ordinarily, I would have voted to grant this matter; however, with a plan announced by the Governor to call the Legislature into a special session to consider tax matters, this matter addresses itself to the lawmakers, who make policy decisions. The function of this court is to address the law as it is written by the Legislature and not to “legislate from the bench.” Because this court would not be able to decide the matter, if granted, before the November legislative session, comity dictates this court respect and yield to coequal branches of government on this policy issue. Additionally, if this court were to grant the taxing authorities’ writ application, I am convinced that the court would affirm the well-reasoned decision of the majority of the court of appeal, which is consistent with a decision of a sister court of appeal. See Lopinto v. Expedia, Inc. (WA), 21-132, p. 10 (La.App. 5 Cir. 12/23/21), 335 So.3d 432.

2.   In pertinent part, L.A.C. 61:I.4301(C),”Sales of Services,” provides:b. The entire amount charged to a customer for any of the taxable items listed in R.S. 47:301(14)(a)-(g) is taxable if billed in a lump sum. Although the law provides many exemptions, unless they are specifically identified and segregated in billings to customers, the entire charge will be subject to the tax. Whether the consideration paid for sales of services is in the form of cash or otherwise is immaterial.c. R.S. 47:301(14)(a) includes the furnishing of sleeping rooms, cottages, or cabins by hotels as sales of services. Hotels have been defined in R.S. 47:301(6) and the regulation issued under LAC 61:I.4301.C.Hotel. If an establishment meets the definition of a hotel under these laws, all charges for the furnishing of rooms in that establishment, other than to permanent full-time occupants, constitute sales of services.

3.   Cf. Robinson, 23-0069 at 4-5, 389 So.3d at 189 (Theriot, J., dissenting) (concluding that the regulatory provision “simply ․ restat[es] the applicable statutory provisions[, La. R.S. 47:301(6), defining ‘hotel,’ & La. R.S. 47:301(14)(a) defining ‘sales of services,’ and La. R.S. 47:302(C)(1)] and does not extend the taxing jurisdiction of the statutes.”

4.   The entirety of “Taxes & Fees” is calculated by applying the applicable sales tax rate to the “retail rate” charged by the facilitator. See Robinson, 23-0069 at 24, 389 So.3d at 185.

5.   Notably, under La. R.S. 47:302(C)(2) (quoted supra), the “dealer,” who is a party to the taxable transaction, is the party responsible for remitting the taxes collected to the taxing authorities. Lopinto, 21-132 at 10, 335 So.3d at 442 (citing Normand, 19-00263 at 18, 340 So.3d at 626).

6.   Concerning the collection and treatment of sales tax by the dealer, La. R.S. 47:337.17(A)(1) & (2) provide:(1) The tax levied by local ordinance shall be collected by the dealer from the purchaser or consumer, except as provided for the collection of tax on motor vehicles in R.S. 47:337.15(B) and the collection of tax on property leased or rented for use offshore in R.S. 47:301(4)(d)(ii). The dealer shall collect the sales tax on off-road vehicles and remit them directly to the Department of Public Safety and Corrections upon application for certificate of title and registration as required for the registration and licensing of other vehicles under the provisions of Subsection B of this Section. The dealer shall collect the sales taxes on off-road vehicles from out-of-state residents who purchase off-road vehicles in this state and remit the sales taxes due directly to the collector.(2) The dealer shall have the same right in respect to collecting the tax from the purchaser, or in respect to nonpayment of the tax by the purchaser, as if the tax were a part of the purchase price of the property, or charges for services, and payable at the time of sale.

7.   Such findings are supported by the legislative history of the relevant provisions in the tax code. Noteworthy is the fact that the legislature appears to have recognized that the law, as currently written, does not provide for the taxation the facilitation services in question in this case. In 2016, the legislature attempted to amend the applicable law to expend the definitions of dealer and hotel to include the services provided by facilitators/remarketer as “sales of services.” See 2016 La. 1st Ex. Sess, H.B. 59 (Act 17). In the original version of H.B. 59, amendments were proposed to La. R.S. 47:301(4), which defines “dealer,” and to La. R.S. 47:301(6)(a), which defines “hotel.” The original legislation proposed that the definition of “dealer” be expanded to include:(m) Any person who remarkets sleeping rooms, cottages, or cabins that are located in the state, whether at a single business location or at a residential location, including but not limited to a house, condominium, camp, cabin, or other building structure used as a residence. Remarketing shall include reserving, arranging for, conveying, or furnishing occupancy, whether directly or indirectly, for an occupant for rent in an amount determined by the person remarketing.La. R.S. 47:301(4)(m). Changes to the definition of “hotel” in La. R.S. 47:301(6)(a) and the addition of La. R.S. 47:301(6)(d) were proposed:(6)(a) “Hotel” means and includes any establishment or remarketer engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests, where such establishment consists of sleeping rooms, cottages, or cabins at a single business location or at a residential location, including but not limited to a house, condominium, camp, cabin, or other building structure used as a residence.․(d) For purposes of this Chapter, the term “remarketer” shall include any person or business entity that reserves, arranges for, conveys, or furnishes occupancy, via Internet or other electronic communication, to an occupant for rent in an amount determined by the remarketer, directly or indirectly.These proposed amendments were aimed at expanding the definition of “sales of service” through the definition of “hotel” to include those “persons” engaged in furnishing sleeping rooms via online services as a “remarketer” that “reserves, arranges for, conveys, or furnishes occupancy, via Internet or other electronic communication, to an occupant for rent in an amount determined by the remarketer, directly or indirectly.” Although the other proposed changes to these definitions regarding an AirBnB-type entity, that is, “such establishment consists of sleeping rooms, cottages, or cabins at ․ a residential location, including but not limited to a house, condominium, camp, cabin, or other building structure used as a residence,” (see La. R.S. 47:301(4)(f) and (6)(a)(ii)) survived subsequent amendments by the House Floor, Senate Floor, and Conference Committee, those related to “remarketers” did not. That “the Legislature's rejection of [the] 2016 amendment that [would have] expand[ed] the definition of ‘hotel’ prospectively to include online room ‘remarketers’ ” was recognized by the appellate court in Lopinto:It seems obvious that had the Legislature desired for companies like the [online travel companies] to be considered within the definition of “hotel” for “sales of services” tax purposes, it would have not rejected the proposed amendment.Id., 21-132 at 15 n.7, 335 So.3d at 443 n.7.

Weimer, C.J., concurs and assigns reasons. Hughes, J., would grant and docket. Crichton, J., concurs for the reasons assigned by Chief Justice Weimer and assigns additional reasons. Griffin, J., would grant and docket.