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New Booking Fee Tax in NYC Goes into Effect September 1, 2009

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Josh started this discussion 15 years 3 months ago

New Tax On Travel Agency Service Fees For Hotels In NYC
http://www.traveltrade.com/news_article.htm?id=8223&p=news.htm

From the press release:

Despite continuing efforts by ASTA, ASTA members, and its allies to have it rescinded, it now appears that the recently-enacted new tax on travel agency service fees related to hotel sales for hotels in New York City will go into effect on September 1, 2009.

The intent of this ordinance, enacted without notice or hearing, is to impose a 5 7/8-percent tax on certain travel agency income associated with the sale of hotel space in New York City.

The tax applies to the difference between amounts received for booking a hotel room and amounts paid to the hotel operator for the room. It includes “any service and/or booking fees that are a condition of occupancy.” According to published reports quoting Elizabeth Thomas, media specialist for the New York City Law Department: “The provisions of the law are not limited to online travel companies. All payments made to travel intermediaries as a condition of occupancy, including booking fees, will be subject to tax." The tax for each element of room rent must be separately stated separately on any bill/statement/charge rendered by the retailer, termed a “room remarketer” under the ordinance, to the room occupant.

The only compensation model not taxed by the new ordinance is one in which the agency’s compensation for the sale is pure commission. The application of the ordinance to a “package” consisting of, for example, air, transfers, and hotel for a single price cannot be predicted at this time. The city of New York is planning to issue regulations shortly that ASTA hopes will clarify the application of the tax to packaged components sold at an aggregated price.

The tax is imposed on any party who books or facilitates the booking of hotel rooms through the Internet “or any other means whatsoever.” Such parties must register with the city by September 4, 2009 on a form to be provided by the commissioner of finance. The first tax return is due December 20, 2009 for the quarterly period ending November 30, 2009. Thereafter, tax returns are due 20 days from the last day of February, May, August, and November.

There are no geographical limitations on the application of the tax. It applies to the sale of any hotel room in New York City without regard to where the sale occurred.

The full text of the ordinance is set out on www.ASTA.org.

Will this affect domestic and/or overseas hostel booking engines?

What do they mean by "The only compensation model not taxed by the new ordinance is one in which the agency’s compensation for the sale is pure commission"?

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Josh Hostels

15 years

There is an interesting article about it here:
http://www.travelweekly.com/article3_ektid202756.aspx

The new tax was signed into law by Mayor Michael Bloomberg on June 29 as an amendment to New York’s existing hotel occupancy tax. It requires resellers of New York hotel rooms to remit a tax based on the full amount paid by the customer as "a condition of occupancy," including some service fees and charges.

In its letter to the finance department, ASTA posed questions about how the city plans to communicate and enforce the tax with hotel resellers based outside of New York, including resellers in other countries.

The audit memo’s instruction for remarketers that buy hotel rooms from other remarketers and do not know the cost of the individual components is to calculate the tax based on a "15% markup on 70% of the average retail rate of a similar room may be used to compute additional rent." In response, ASTA wrote, "There is no information to support the percentages used."

Furthermore, ASTA expressed concern about how retailers should be expected to interpret the "average retail rate of a similar room."

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santa klaus

15 years

Bureaucrats...:rolleyes:

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Josh Hostels

15 years

There is another article about it here:
http://www.travelweekly.com/article3_ektid203716.aspx

ASTA concluded that most travel sellers will be unaffected by New York’s recently implemented hotel resellers tax, after obtaining more information from the city’s finance department about the tax.

...

The new tax was signed into law by Mayor Michael Bloomberg on June 29 as an amendment to New York’s existing hotel occupancy tax. It went into effect Sept. 1 and requires resellers of New York hotel rooms to remit a tax based on the full amount paid by the customer as "a condition of occupancy," including some service fees and charges.

However, ASTA said it has learned that the tax does not apply to agents' service fees when the client pays the hotel directly for a room. Also, the tax does not apply to commissionable hotel packages that haven't been marked up by a travel agent.

That sounds like hostel booking engines won't be affected...

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