While we agree in principle with ASTA’s position on the newly-implemented Hotel Room Occupancy Tax for Room Remarketers, we disagree with their interpretation of the law as it applies to travel retailers. In the ASTA Member Alert of September 3, 2009 they state
Under the new tax computation procedures, whenever a travel retailer purchases New York City vacation packages from other travel sellers and then sells the packages to their own clients without knowing the cost of the hotel component of the package, it must use the following method of collecting and remitting taxes - “a 15-percent markup on 70 percent of the average retail rate of a similar room … to compute additional rent.”
That statement is correct in certain circumstances, but is misleading to travel agents who might book their New York City vacation packages with reputable tour companies who have registered with the City and who have already made proper arrangements to pay the additional markup tax. New York City Vacation Packages (NYCVP), an ASTA TOP member, is one such company who has already included the markup tax in the price quoted to the travel agent, and who will remit the tax to the City as specified in the City’s Statement of Audit Procedures.
Travel agents who book their clients’ vacation with NYCVP do not need to be concerned about the new tax law, so long as they charge clients the NYCVP-quoted commissionable price for all FIT (non-group) bookings and do not add a service fee to the booking. We further agree with ASTA's position that the interpretation of the tax is vague, confusing and generally unacceptable, but we are concerned that ASTA's interpretation will lead to even more confusion on the part of travel agents. We request that ASTA clarify the Alert so that travel agents can properly service their New York City-bound clients.
UPDATE 9/4/09 2pm: ASTA has informed us that they are changing the wording on their Alert based upon our recommendation. Thank you ASTA.