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AIRBNB and Palm Beach Tax Collector End Six-Year Battle


A six-year long lawsuit came to a conclusion on Monday, October 19, 2020, when the Florida Supreme Court declined an appeal by Palm Beach County Tax Collector Anne Gannon in favor of Airbnb, Tripadvisor and HomeAway (“Airbnb”).

In June 2019, Palm Beach County commissioners approved the requirement of the collection and taxes of Airbnb and others to pay to the tax collector. Tourist Development Taxes (TDT), also termed tourist tax, bed tax or resort tax, is a 5% charge on the revenue from short-term rentals of six months or less. TDT was aimed at online marketplaces that earn a commission from people renting out their properties to guests. These online reservation services accept payments from renters and then pass along the money to property owners.

Airbnb sued in response, citing the clause “unconstitutional and unlawful” as grounds to the tourism tax and claimed that they did not fall within the class of persons who had TDT obligations under the applicable statutes.

The crux of the argument was that such platforms do not own the properties, nor retain any physical control over the properties. They disputed that they are not parties to the rental arrangement, do not set the terms of the rentals, and are not compensated for providing accommodations. As a result, these online companies merely assist in reservations and hold no ownership or possessory interest in the properties.

Further, Airbnb argued that platforms, such as theirs, could not be defined as dealers. Fla. Stat. § 212.06(2)(j) defines “dealer” as “any person who leases, or grants a license to use, occupy, or enter upon” numerous types of short-term accommodations.

Gannon countered as to reasons why Airbnb, and other online platforms, did fall into this category and should be required to collect and remit the TDT. She alleged that since Airbnb does engage in the area of renting, leasing, or letting short-term properties, then it does exercise a taxable privilege. As such, they should be held as dealers since they accept payment on the property owner’s behalf.

In a 2-1 decision in March 2020, the Fourth District of Appeals ruled, in favor of the platform companies. The ruling also aligned with Florida’s tax requirement of being “construed in the light most favorable to the taxpayer.” The conclusion was that the online companies would not be subject to the tourism tax and established that the online platforms did not fall within the classification.

The majority opinion looked to the definition of rent, lease or let as the permitting of possessory or use rights in a property.  They stated that a dealer is able to grant a possessory interest in the property. It was determined by the court, under the county ordinance, that the online platform companies are simply conduits and do not have any possessory interests in the properties.

The dissent addressed areas of state law which focus on who receives the consideration in a lease or rental agreement.  It is the opinion of the dissent, that the person who collects monies and remits the taxes are responsible for the taxes, placing it on the online platforms since they are the ones receiving payment.

Gannon’s challenged the decision of the 4th District Court of Appeals by filing on July 1, 2020 in Florida’s Supreme Court, where they declined review.

Brendan A. Sweeney, Esq., LL.M., of Sweeney Law, P.A., a boutique firm in Fort Lauderdale, Florida, regularly handles complex litigation matters throughout Florida. Brendan A. Sweeney, Esq., LL.M. is an AV Preeminent Martindale Rated Attorney, that has been recognized as a Florida Super Lawyer in 2021, 2020 and 2019, Florida Legal Elite in 2020 and 2019, and as a Florida Super Lawyer Rising Star in 2018, 2017, 2016, 2015, and 2014. If you have any questions and/or issues regarding vacation rentals, then contact Sweeney Law, P.A. at (954) 440-3993 immediately to protect your rights. www.sweeneylawpa.com.

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