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GA Online Travel Company Taxes
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In January 2011, the South Carolina Supreme Court upheld the South Carolina Department of Revenue's position that online travel companies were responsible for the sales tax on accommodations at the retail price charged to consumers.  The case, Travelscape LLC v. South Carolina Department of Revenue, 705 SE 2d 28, determined that the OTC practice of paying sales and accommodations taxes on the wholesale price the OTCs paid South Carolina hotel properties was illegal.

SC DOR has mailed all the OTCs a letter advising them they must obtain a South Carolina retail sales tax license and should file monthly sales tax returns based on the “gross proceeds” derived from their sales (rentals) of accommodations as outlined in SC Code Section 12-36-920.  The sales tax on accommodations is due as the accommodations are furnished, beginning with accommodations furnished on and after November 1, 2011.  In addition, DOR advised them that in order to purchase the accommodations at wholesale (tax free) from hotels in South Carolina, online travel companies should provide each hotel a properly and fully completed resale certificate (Form ST-8A) using their South Carolina retail sales tax license number.

DOR realizes that certain system changes must be instituted by the OTCs in order to properly report the taxes to the State.  As such, DOR formally notified all known registered online travel companies that beginning with the November 2011 return due December 20, 2011; all amounts reported to the DOR on each monthly tax return should be at the gross amount, with no deduction for the wholesale rental amount the online travel company paid to the hotel.

The SC Department of Revenue is only concerned with collecting the state sales and accommodations AND NOT the locally-imposed accommodations tax.  The city and/or county your hotel is located in is responsible for imposing and collecting the locally-imposed accommodations tax - typically the 3% accommodations tax remitted to your city and/or county.

The South Carolina Hospitality Association has been working with DOR for several weeks to insure that not only all of the sales and accommodations taxes are appropriately paid at retail by the OTCs, but also that South Carolina "brick and mortar" hotels do not have a tax liability in case an OTC does not collect and pay the taxes on their retail transactions.  DOR has supplied the SCHA a letter stating that the OTCs should purchase accommodations from South Carolina hotels at wholesale using a properly and fully
completed resale certificate.
In the event that resale certificates are not supplied to the local hotels by an OTC, DOR will still recognize the sale as wholesale and not hold the South Carolina hotels liable for the tax. We believe that the Supreme Court’s ruling validates that the OTC’s are the responsible party.

Accordingly, DOR expects local hotels’ sales tax returns to reflect the appropriate deductions of accommodations furnished associated with transactions of the OTC’s.  DOR also expects reporting by local hotels any additional taxes related to additional guest charges.


  • When completing your Form ST-388, State Sales, Use and Accommodations Tax Return, we would suggest on the 5% Sales and Use Tax Worksheet #3, under "Section 13 - Sales and Use Tax Allowable Deductions," that South Carolina hotel properties write in "Online Travel Company Transactions" in section b for the monthly OTCs sales at wholesale.  The same process would apply in the 2% Accommodations Tax Worksheet #4, under section 17.  See example on the right.
  • If an online travel company remits the state sales and accommodations tax to your property with the cost of the accommodations provided, the DOR sugggests you return the state sales and accommodations to that online travel company as from the department's perspective, it will be "cleaner" since the OTC is responsible for the state sales and accommodation tax based on transactions on and after November 1, 2011. 

Click here for a copy of the letter to SCHA explaining the new rules related to OTCs.  You will want to retain a copy of this letter for future sales tax audits so you have a record of the DOR's hold harmless statement as to your tax liability.

If you are not a member of the South Carolina Hospitality Association and the American Hotel & Lodging Association you should thank the hundreds of hotels in our state that are members enabling the associations to protect your business.  The simple language to protect brick and mortar hotels from potential tax liabilities if the OTCs do not pay their required sales taxes would not have happened without our members pushing for the correct language to protect your business.  Consider joining the associations to help us continue protecting your business.  It will be one of the best investments you make to help not only your business, but your career.  Click here for more information.

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