Court hears Florida online hotel tax appeal

Millions of dollars are at stake in the case being considered by three judges of the 1st District Court of Appeal, but any ruling they make is likely to be appealed to the Florida Supreme Court by the losing side.

Roberto "Bobby" Martinez, a former U.S. attorney from Coral Gables, argued the online companies are engaged in a "sham or scheme" to keep those millions.

"They're essentially gaming the system to cheat the municipalities and counties," Martinez said.

Darrell Hieber, a Los Angeles lawyer who has represented online companies in similar cases across the nation, told the panel the markup is a fee for his clients' services rather than rent on which taxes are due.

Florida's law is unclear on the issue, Hieber argued. Several bills that would have settled the matter in favor of either the online companies or local governments have been introduced in the Legislature over the years. None of those measures has passed.

"What that leaves at best is ambiguity, and when there's ambiguity that means the taxpayer wins," Hieber said.

The counties are appealing a decision last year by Tallahassee-based Circuit Judge James Shelfer, who sided with the online companies.

Martinez argued that Shelfer erred in finding the law ambiguous and issuing a summary judgment rather than allowing the case to go to trial.

He said state law requires that the local option taxes of 1 percent or 2 percent be collected on the "full consideration" of short-term rentals — those less than six months.