By Chelsea Marmor and Open Weaver Banks
The Appellate Court of Illinois reversed the Circuit Court’s $29.1 million Chicago Hotel Accommodations Tax (CHAT) award for Chicago holding that Defendant’s online facilitation and service fees were not subject to CHAT. CHAT applies to the “gross rental or leasing charge,” which was not defined during the years at issue Chicago argued that the facilitation and services fees must be included in the tax base because the facilitation and services fees are in the nature of rent. The Court disagreed with Chicago finding that the Defendant’s facilitation and service fees were in exchange for the booking convenience the Defendant offered (such as being able to book multiple services in one transaction) and the benefits of the Defendant’s prenegotiated hotel rates. The facilitation and services fees were not for the right to occupy hotel rooms and therefore, could not be subject to CHAT. City of Chicago v. Expedia, Inc. et al, No. 1-15-3402 (Ill. App. Ct. 2017).