Monday, March 15, 2010

Hamilton County Commissioners joining federal lawsuit vs. hotel-booking companies

Hamilton County, Ohio commissioners last week voted to join a federal lawsuit alleging online hotel-booking companies owe Ohio communities for lost tax revenues, according to the Cincinnati Enquirer. That suit involves well-knowns such as Travelocity, Hotwire, Orbitz,and Priceline.

The case in point is actually about five years old, being first filed by the City of Findlay, Ohio in Hancock County Common Pleas Court in October 2005 and moved to the Ohio Northern District Court in November. ( Here )

The cities of Columbus & Dayton next filed the same action in both Southern & Northern District Courts in Aug. 2006.

Defendants in the Southern District case motioned, and were granted a change of venue solely to the Northern District in 2007, with the two Northern District cases being consolidated in November 2009. At this point, there are now six cities, three townships, Lake Township/Wood County, and the Franklin County Convention Facilities Authority being represented as plaintiffs against ten mostly well-known booking companies.

Ohio isn't the only place hotel booking companies have problems. A Tax Foundation special report last month said local officials in cities in 22 states have commenced legal action against online travel companies like Expedia, Hotels.com, Orbitz, Priceline and Travelocity for what they claim are uncollected taxes. "The legal disputes," the report says, "centers on whether hotel taxes should be assessed on travel booking services, which in turn depends on whether cities' hotel occupancy taxes should be calculated on the amount the hotel receives (which assumes that hotel taxes are paid only on the basis of hotel occupancy), or the amount the consumer pays (which assumes that the online companies are agents or resellers, not facilitators). Online travel companies neither own nor resell hotel rooms."

The Tax Foundation report also mentions,"Circulating on Capitol Hill is proposed language for a federal bill or amendment that would pre-empt occupancy taxes based on travel booking or travel agency services. Supported by the Coalition for Internet Travel Tax Fairness, the bill is designed to narrowly bar discriminatory taxation of online travel company services."

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