Supreme Court takes up Breckenridge case over taxes for online travel companies

Sawyer D' Argonne
Summit News Daily

Should online travel companies have to pay accommodation taxes in places like Breckenridge?

That’s one of many questions that the Colorado Supreme Court will have on their plate early next year, after granting a writ of certiorari to the town of Breckenridge to determine whether or not the Colorado Court of Appeals erred in holding that online travel companies are not required to pay Breckenridge’s accommodation taxes.

In 2016, Breckenridge brought a case against 16 online travel companies including Expedia,,, Hotwire Inc. and a number of other notable fixtures in the industry. The town asserted that the companies are required under town code to collect and remit accommodation and sales taxes to the town on hotel rooms booked through their websites. The district court disagreed, and the case was taken to the court of appeals.

But Breckenridge didn’t have any better luck at the appellate level, as the Colorado Court of Appeals affirmed the holding of the district court despite the town’s assertions that the court erred in determining that the companies were not “renters” or “lessors,” that the court misapplied the summary judgment standard, that its sales tax claim shouldn’t have been dismissed and that its motion for class action certification should have been granted.

In August, the Colorado Supreme Court agreed to hear the case.

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According to the appellate court opinion penned by Judge Dennis Graham, whether or not the companies were required to pay accommodation taxes under the town code was largely a matter of definitions and language within the code.

Breckenridge contends that the companies are renters or lessors under the code because they essentially sell the right to use hotel rooms, and that the code doesn’t require a person to have physical possession of the right sold. The companies maintain that they’re technology companies that act as intermediaries between purchaser and hotels.

The code states: “The legislative intent of the town council in enacting this chapter is that every person who, for consideration, leases or rents any hotel room, motel room, or other accommodation located in the town shall pay and every person who furnishes for lease or rental any such accommodation shall collect the tax imposed by this chapter.”

The town imposes a 3.4 percent tax on the price paid for leasing or renting a room. But the court of appeals noted that physical possession is inherent in the meaning of renting and leasing, and because the hotels maintain possession of the rooms the companies are essentially working as brokers, meaning they’re not subjected to the tax.

“Since the (companies) had no possessory interest and were not engaged in the business of owning, operating, or leasing, and could not independently grant customers access to rooms, they could not be liable for collecting and remitting taxes,” wrote Graham.


The town also contended that the district court erred in granting summary judgment for the accommodation tax claim, saying that issues of material fact exist as to whether the companies acquire inventory, whether they provide customer service and the extent to which hotels are involved in online transactions.

Breckenridge asserts that it provided evidence that the companies do acquire inventory, pointing to reports prepared by the Securities and Exchange Commission where the companies allegedly admit to acquiring inventory. The town also said that taxable transactions arise when the the companies accept a customer’s payment in exchange for the right to use the accommodation, and that a customer’s entire interaction is with the online travel company.

The court found that SEC filings refer primarily to the hotels’ inventory, and that the other arguments were immaterial because they didn’t indicate possessory interest.

The opinion reads: “Because no genuine issue of material fact was presented, summary judgment was appropriate.”


Breckenridge initially brought the case against the companies hoping to recover both unpaid accommodation and sales taxes. However, the district court found that Breckenridge had no cause of action in respect to the sales tax claim because the town failed to exhaust its administrative remedies before taking the issue to court.

On appeal Breckenridge argued that it wasn’t required to exhaust its own administrative remedies because it would be futile, and a question of law not subjected to exhaustion requirements. Again the court disagreed.


The town also argued that the district court abused its discretion by denying its request for class certification with 55 other Colorado communities with similar ordinances levying a lodger’s or accommodation tax.

According to the opinion, Breckenridge was able to satisfy all four prerequisites to grant a class certification, wherein a large group is represented in a lawsuit collectively. However, the certification was denied on the grounds that Breckenridge was primarily seeking monetary damages, and that the 55 other municipalities utilized “at least 20 different standards to determine who is obligated to collect and remit accommodation tax,” meaning that the court couldn’t use a single test to determine liability for each municipality.


On Aug. 20, the Colorado Supreme Court announced that it would grant Breckenridge’s petition for writ of certiorari. According to the announcement, the court will determine whether the court of appeals erred in holding that the companies are not required to collect Breckenridge’s accommodation tax under the town’s code, but will not hear arguments on the other issues detailed by the court of appeals.

The case will remain in briefing until early January, meaning that oral arguments won’t be heard until at least the early months of 2019.

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