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Major travel internet cos sued for cheating on taxes
The city of Los Angeles is suing a group of well-known internet travel sites such as Orbitz for allegedly skimping on hotel room taxes.
The suit says sites are cheating cities on taxes by pocketing the difference between the hotel room tax they pay and the amount collected from consumers, according to Reuters.
The city?s position is that companies such as Priceline.com, InterActiveCorp.’s Expedia, Cendant Corp.’s Orbitz and Sabre Holdings Corp.’s Travelocity have underpaid so-called transient occupancy taxes.
“The lawsuit has no merit,” countered Kendra Thornton, a spokeswoman at Orbitz.
InterActiveCorp, in its latest quarterly U.S. Securities and Exchange Commission filing, said it “does not pay occupancy tax on hotel customer payments that it retains for the intermediary services it provides in connection with its merchant hotel business.”
The city?s suit says sites are charging and collecting taxes from occupants based on marked-up rates, but only pay taxes to cities based on the lower, negotiated rates.
Los Angeles, which has a room tax of 14%, also said in the lawsuit that the Web sites often charge more money in fees and taxes than the appropriate occupancy tax rate.
Report by David Wilkening
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