Some states have chosen to adopt an “accommodation intermediary-specific” statute ( i.e. , a statute that applies only to platforms facilitating lodging transactions), 1 whereas other states encompass lodging facilitators within the scope of their general marketplace facilitator statutes. Intermediary-Specific or General Marketplace Facilitator Law: At the outset, the type of intermediary law adopted by the state may impact the obligations of an intermediary facilitating lodging transactions in that state. A wide array of issues has arisen as state taxing agencies and intermediaries grapple with the impacts of these laws. In recent years, a number of states have imposed tax collection and remittance duties on platforms facilitating lodging transactions. Finally, the transaction tax obligations of a lodging intermediary platform become further complicated when more than one lodging intermediary is involved in the lodging transaction. In addition, local taxes can present a significant compliance burden when a lodging intermediary platform is required to remit a tax directly to a large number of localities, and constitutional challenges are likely to mount around these schemes. As in the past, many of the most complex transaction tax issues for lodging intermediary platforms involve the transaction tax base, and particularly whether the tax base includes amounts charged and retained by the intermediary above and beyond the amount paid for the lodging itself. Furthermore, the state’s intermediary law may cover platforms facilitating transactions involving both traditional hotel rooms and residential short-term rentals, or only one of the two (and in some states, different intermediary laws may apply to different types of lodging). First, the treatment of lodging intermediary platforms often depends on whether a state has adopted an accommodation intermediary-specific law or includes these platforms within the broader reach of a marketplace facilitator scheme. The transaction tax obligations of a lodging intermediary platform in any given state depend on a number of factors. Platforms facilitating lodging transactions, and their tax advisors, should be particularly vigilant around the issues outlined below. While more clarity has emerged as states have enacted legislation and issued relevant guidance in this area over the past few years, approaches vary across the states, and in some jurisdictions vexing questions remain. This article, the first in a series from Checkpoint Catalyst on intermediary platforms, outlines common sales, use, and occupancy tax (collectively, transaction tax) considerations for platforms facilitating lodging transactions, including online travel companies and short-term rental platforms. Nexus may arise through the dollar amount or volume of services offered or goods sold into the state through the platform, or through a physical contact with the state through the platform’s agent providing the service or delivering the goods. Services such as lodging, passenger transportation, meal delivery, and similar transactions are increasingly offered through online intermediary platforms and apps that may have sales and use tax nexus with a state.
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