Orbitz, Expedia and 12 other online travel companies have been sued for failing to pay $30 million in room taxes that they collected on hotel bookings.
The suit, filed February 9th in the Superior Court for the County of San Diego, claimed the companies paid the city’s transient occupancy tax, a 10.5 percent charge levied on the price of a hotel room, based on the discounted rate they received, not what customers ultimately paid.
City Attorny. Michael Aguirre said the incongruity has cost the city $6 million annually in lost hotel tax revenues. According to the attorny, the problem began in 1999.
“They’re charging the customer at the retail level and paying the city at wholesale level,” Aguirre said. “The tax is levied based on occupancy. The fact that it goes through the medium of the Internet doesn’t make any difference as to the appropriateness or scope of the tax.”
The suit, filed in Superior Court, resembles cases filed against the travel companies in other cities, including Los Angeles and Philadelphia.