Philadelphia Hotel Tax

The Court of Common Pleas of Philadelphia County has upheld the Philadelphia Tax Review Board’s ruling that Expedia, an online vendor of discount hotel rooms, is not an “operator” of a hotel, and is not required to remit hotel occupancy taxes on fees charged to its customers exclusive of the hotel room rate. Under the Philadelphia Code, an “operator” of a hotel is defined to mean only those who “maintain, operate, manage, own, have custody of, or otherwise possess the right to rent or lease overnight accommodations in any hotel.” The Court found that Expedia merely acted as a middleman between the hotel and the guest, and the hotel reserved all rights with respect to the actual renting of hotel rooms. Consequently, the fees that it charged separate from the hotel rate were not subject to the tax. City of Philadelphia v. Tax Review Bd., No. 00764 (Pa. Com. Pl. January 18, 2011)

Inheritance Tax

An irrevocable trust that permitted the grantor-trustee to alter the disposition upon the donor’s death of the trust assets was subject to Pennsylvania Inheritance Tax. Under Pennsylvania law any transfer by a decedent prior to death for less than adequate consideration is subject to Inheritance Tax, if the decedent retained the right to designate the persons who shall possess the transferred property. Because the irrevocable trust permitted the grantor-trustee to change the beneficiary of the trust assets, it was subject to Inheritance Tax. Pennsylvania Inheritance Tax Ruling No. INH-10-003 (November

29, 2010).