Thursday, April 8, 2010

New York State Attempts Fuzzy Math in Latest Occupancy Tax Skirmish

The current budget under debate in Albany includes an interesting twist in the ongoing OTA lodging tax fight. The proposed budget contains language that attempts to compute the occupancy tax on the retail rate by simply multiplying the net rate by 120% and applying the tax rate on this amount.

Yes, you read that right. This simpleton proposal assumes that all OTA deals are created equal and that the mark-up is always 20%. If passed, this will certainly will make future hotel/OTA negotiations easy! Doubt it.

1 comment:

  1. The math geniuses who created this policy must the same crew who came up with the ridiculous formula to apply assess hotel merchant occupancy tax on travel package sales in New York City.

    It is highly unlikely that these calculations will stand up in court as I do not believe there are any precedents that allow taxes to be formally assessed on an arbitrarily estimated figure that does not reflect a true dollar amount in a financial transaction.

    Just when we thought the situation could not get worse or any more confusing...

    Or perhaps it is actually part of a job stimulus bill to keep the lawyers fully employed...