Tax & Accounting Blog

On Line Travel Services Subject To Sales Tax in D.C.

Indirect Tax, Sales and Use Tax February 11, 2011

The District of Columbia has recently approved permanent legislation that imposes the District sales and use tax on accommodations arranged by on-line travel companies. The definition of “retail sales” for sales and use tax purposes now includes net charges and additional charges for any room or rooms, lodgings, or accommodations furnished to transients by any room re-marketer, as well as by any hotel, inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly furnished, to transients for consideration.

The taxation of on-line travel companies has been a popular issue so far this year.  Last month Connecticut  introduced legislation that, if enacted, would impose the sales tax on the service fees charged by on-line travel service companies who provide hotel rooms at a discounted rate. In South Carolina the Supreme Court ruled that service and facilitation fees charged by an on-line travel company for providing hotel reservations in South Carolina were subject to the state sales tax.

Given that it is only the beginning of February it will be interesting if other states follow in the footsteps of these three.

A18-715 (approved January 27, 2011, effective after a 30-day congressional review period) can be viewed D.C. Council website: