LA Sues Travel Websites for Underpaying Hotel Taxes

Los Angeles leaders have accused Internet travel companies of costing the city millions of dollars a year by underpaying hotel taxes.


Advertisement


AccountingWEB is pleased to bring you tools that can help systematize the accounting department of a small company, corporate business or a public accounting firm. Over 200 accounting department policy templates, written in Microsoft Word format by PolicySoft, are available individually or in groups for immediate download.


Accounts Payable General Accounting Department
Accounts Receivable General Ledger
Credit & Collections Payroll
Fixed Assets Shipping & Receiving



Los Angeles claims that Priceline.com, Expedia and Orbitz, among others, are buying rooms in bulk from hotels at deep discounts, marking up prices for consumers and then paying taxes on the cheaper rate, the Orlando Sentinel reported. The Los Angeles city hotel tax rate is 14 percent, which is charged to consumers, but the Internet companies are pocketing the difference, the lawsuit says.

"The webites can't have it both ways," said Katie Buckland, a spokeswoman for City Attorney Rocky Delgadillo, according to the Associated Press. "They can't charge consumers taxes based on retail price but give back to the city only part of the money."

Following the lead of Orange County, Fla., the city filed a lawsuit last week in Los Angeles Superior Court, and wants payments going back to 1999.

The Internet companies have argued that they don't actually sell hotel rooms, they sell the service of helping consumers find cheaper rates. "We believe that the allegations in the [Los Angeles] complaint are entirely without merit and will vigorously defend against this lawsuit," said Andrea Riggs, spokeswoman for the parent company of Expedia and Hotels.com, InterActiveCorp.

Orange County, Fla. officials say that the Internet companies cost them $5.5 million in tourist-tax revenue last year. They also say that the sales tax lost could have been enough to renovate the Florida Citrus Bowl.

"I'm very reluctant to get into lawsuits of any kind,” said Orange County Comptroller Martha Haynie, “but the fact of the matter is sometimes that's what you have to do to force an issue."

You may view this press released issued last week from the Interactive Travel Services Association.

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.