Online travel companies sued for multi-million hotel taxes
Online travel companies are facing a flurry of lawsuits from upset city officials who say they were bilked out of tens of millions of dollars in hotel and occupancy taxes.
One of the stiffest challenges was outlined Monday in Georgia Supreme Court. The city of Atlanta claims in a lawsuit that Travelocity, Orbitz, Expedia and 14 other online travel companies owe the city "untold" millions in unpaid taxes.
The lawsuit is among a growing number filed by officials who contend that city coffers have been shortchanged by the online travel sites. Similar challenges have also been filed in Los Angeles, Philadelphia, Miami, Chicago and the tourist town of Branson, Mo.
The lawsuits are challenging the pricing scheme used by the travel companies.
Consumers are charged a rate when they book a room, and the travel sites later reimburse the hotels at a cheaper rate, allowing them to pocket service fees. The taxes are paid on that cheaper rate - and cities say they don't collect what amounts to millions in tax revenues. The companies say the exact markup rate is confidential.
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