"Cities overreach on hotel fees"
By Joseph Henchman
A recent legal victory for some Texas cities against online travel companies over hotel taxes may have given Anaheim officials hope for their own case, but they shouldn't start celebrating just yet. Other cities have not fared as well in similar lawsuits. ...
Here's what Fairview Heights, Anaheim and other cities wanted to change: In a typical transaction, a traveler picks a hotel and books a room, stays there, and pays the hotel a room charge plus a local occupancy tax based on the room charge. The hotel keeps the room charge and forwards the tax money to the government.
Enter online travel companies like Expedia, Hotels.com, Orbitz, Priceline and Travelocity, which allow travelers to sort through hotels and book a room on a central Web site. These companies do not reserve or resell hotel rooms, but act as intermediaries to facilitate the transaction between hotel and traveler. The hotel receives an amount for the room, on which the city's hotel tax is based. ...
Judges have not found the cities' arguments convincing. Aside from the Fairview Heights settlement, the Texas lawsuit awarding $20 million to more than 170 cities is the second city victory - and one that the online travel companies are sure to appeal. Lawsuits have been dismissed in nine states and remain pending in the others, including Anaheim's Priceline case, where the Tax Foundation filed a friend-of-the-court brief opposing giving tax collection powers to private contingency-fee lawyers. The case is being appealed to the state Supreme Court.
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Regarding Sarah Kliff’s Jan. 11 Wonkblog excerpt, “An excise tax the U.S. could swallow”:
A...
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