Chicago Loses $29 Million Appeal By Expedia And Other Online Travel Companies
The OTCs generally operate on a “merchant model”.They buy the room nights from the hotels and mark them up. That is where the taxes get funky. The OTC does not charge you tax on what you pay for the room. The OTC charges you a “tax recovery” amount. They then pay the operator occupancy tax based on the net rate the OTC is paying for the room.
What aggravates me about the system is that if the “tax recovery” amount is greater than the tax remitted to the operator, the OTC keeps the difference rather than refunding it. To be fair, I should be open to the possibility that the tax recovery amount is sometimes insufficient, but I’m a cynical bastard, and I’m thinking tax recovery is an additional profit center.
Marijuana Retailer Not Protected From IRS Summons
It would seem to me that it is probably not in the best interest of sound tax administration for the IRS to make 280E enforcement a high priority. It may turn into another debacle such as the one that Lois Lerner created when she decided that the IRS was the last line of defense against dark money. Reilly’s First Law of Tax Policy is “Make tax policy the Switzerland of the culture war”. The IRS is probably stuck with 280E for the moment, but it does not have to make it a major priority. Maybe conservatives could embrace state rights even when it comes to things that they associate with long-haired hippies, but that might be to much to hope for,
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.