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Online Travel Companies Under Pressure To Pay Up Owed Taxes

July 24, 2008 at 10:30 AM | by juliana | 0 Comments

We've posted before on how several online travel agencies are in hot water with local municipalities over hotel room taxes and it looks like the tug-of-war will be going on for a while.

Several towns and counties have complained that online travel agencies like Expedia, Hotels.com and Travelocity have pocketed hotel room taxes which rightfully belong to the city or county that the hotel is located in.

You know what those taxes are like. You see them on your check-out bill and it usually is listed as a state or city tax or both. For instance, we just checked out of a hotel in NYC and were docked with a NY state tax, an NYC city tax and an occupancy tax, totaling about $45.

Anyhow, several cities are saying that these online travel agencies are "improperly keeping tax payments by consumers who book lodgings online." The WSJ reports:

Many of the lawsuits allege the reservation companies charge tax on the retail price, pay tax on the wholesale price and pocket the difference.

And it's not chump change. The state of Florida says the OLTAs will short them about $22 million in taxes with $7 million being owed to Miami alone.

Several cases are before judges right now, including an upcoming one before the Georgia Supreme Court.

What this may mean for you guests who book online? Probably nothing for now. Although if the online travel agencies are forced to hand over more in taxes, you may find a slight increase in room rates on these sites. But that's probably a long ways off for now.

[Photo: WSJ]

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