The cities of San Antonio, Los Angeles, San Diego, Philadelphia, Atlanta and Chicago have sued several web-based travel clearinghouses including Expedia Inc., Travelocity, Hotels.com, and Orbitz for allegedly failing to pay millions of dollars in hotel taxes.
The combined class-action lawsuits seek to recover lost taxes. For one, the city of San Antonio estimates loses as much as $2 million annually in missed tax revenue incurred by at least 16 online agencies. Officials of two other biggest Texas cities, Dallas and Houston, say they could potentially join with San Antonio in the suit filed in federal district court in San Antonio, but are considering their own actions.
An unnamed online travel company is being audited by the state of Texas, which charges a 6 percent bed tax. The estimate can amount to “tens of millions” of dollars in unpaid hotel taxes.
The Interactive Travel Services Association is quick to defend that “the governments misunderstand the role and responsibility of the companies and the laws governing the transactions.”
Quite huge amounts of taxes to recover… quite huge business that took actually a bit late to discern. But clear laws should be laid – crisp and comfortable for all concerned. What’s the law on online travel agents’ tax duties? -- Oh, but another e-commerce subject that is catching us naïve.
What must be the other cities of the traveling world have to say on this big one?