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Anaheim TOT Issue

City of Anaheim Seeks 17 Years of Hotel Records

As many of you by now have learned, the City of Anaheim is seeking records from its hotels in an attempt to collect past Transient Occupancy Tax (TOT) on claimed underpayments that resulted from Online Travel Company (OTC) bookings.

The issue arises out of a recent California Supreme Court Case dealing with the City of San Diego ordinance.  The case holds that hotels are liable for the tax not only on the wholesale cost in “merchant model” transactions but also on the additional amount for room rental that the hotel requires the OTC to charge the visitor. These additional sums are required under the so-called rate parity provisions of such contracts with the OTCs.

In letters sent to Anaheim Hotel Operators, the City is asking to be made whole on such underpayments from January 1, 2000 to the end of 2017.  The City is asking the hotels to provide OTC agreements between 2000 and 2017 and data on each transaction conducted under the merchant model during that 17 year period.

The Court’s decision that the tax should be charged on the full retail sum to the visitor and not the wholesale payment to the hotels by the OTC and so it is, in our view, the responsibility of the OTC to collect the appropriate amount of tax and transmit it to the hotel for payment to the City.

The Association has met with members and affected hotel operators, and is working with legal counsel on the issue as well as with the City to work on resolution of the problem.  We will continue to provide information and updates here as matters develop.