City takes aim at dotcoms on tourism tax
September 27, 2010 at 7:00 pm in Duluth News Tribune
Duluth will hire an attorney to go after tourism tax money the city administration contends has wrongly gone unpaid.
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City takes aim at dotcoms on tourism tax
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This hotel tax debate has been raging for years – see WSJ article at
http://tinyurl.com/2bxkw4s.
Some jurisdictions have been successful in their lawsuits against internet providers but business actually decreased at the hotels . The City of Columbus, Georgia was successful suing online brokers and subsequently Expedia, Orbitz, Travelocity & hotels.com, delisted hotels in Columbus. When an Internet search through these Websites is performed for Columbus, results instead are provided for Phenix City, Alabama, and other jurisdictions. This delisting also has occurred in other jurisdictions.
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The obligation to pay sales tax is determined by the location of the buyer, not the seller. If a business does not have a physical presence in a particular state, such as a store or warehouse, it is not required to collect sales tax for sales from customers in that state.
In legal speak, this connection between sales and location is referred to as a “nexus†and was established by the U.S. Supreme Court in Quill v. North Dakota, 504 U.S. 298 (1992).
The hotel tax issue is even more clouded, as both the buyer and the seller may be located out of state. The only difference between sales and use tax is which person — the seller or the buyer — pays the state.
North Dakota wasted thousands of dollars in legal fees attempting to collect sales taxes from out of state sellers. They lost big time, and until Congress becomes willing to tackle this issue, legal fees spent may be money put down a rat hole. But politicians are generally lawyers, and love suing.
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Yup, if Duluth keeps at this crap they’re going to find themselves like those people up in the Gunflint. You know, the ones who move up there to get away from technology and modern conveniences, but then complain they can’t do their resort bookings online.
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