January 11, 2005
The city of Los Angeles is taking a number of online travel-booking Web sites to court, charging they owe millions of dollars in unpaid hotel occupancy taxes. Expedia, Priceline, Orbitz, Travelocity, and Hotwire are among those named in the action.
City officials charge the Web sites have cheated either their customers or the city. They say when the Web sites book a room for a client, they pay the city the tax based on the discounted rate, but then turn around and charge the customer the city's occupancy tax based on the full price.
"They can't charge consumers taxes based on retail price but give back to the city only part of the money," a spokeswoman for Los Angeles City Attorney Rocky Delgadillo said. "The Web sites can't have it both ways."
The Web sites say that's not the case. A spokesman for the Interactive Travel Services Association says the city's claims are not true, since the hotel tax does not apply to online travel companies. He says the Web sites don't pay any tax, since they are not hotels and don't collect rent.
But Los Angeles is far from the only jurisdiction concerned about the sites. In Palm Springs, Michael E. Fife, president of Palm Springs Desert Resorts Convention and Visitors Authority, said he feels Los Angeles pain.
"This is becoming a major problem," Fife told the Desert Sun. He said Palm Springs will be tracking the Los Angeles action.
