City of Anaheim Wins Landmark $21.3 Million Award in Hotel Tax Lawsuit
The national law firm of McKool Smith represented the City of Anaheim in a recent administrative proceeding that resulted in a $21.3 million award against a group of online travel companies for back taxes, interest and penalties related to the payment of hotel occupancy taxes.
The landmark decision is believed to be the first authoritative ruling that supports the stance of more than 40 other municipalities and governmental entities from across the nation that have filed claims seeking a larger share of hotel occupancy taxes collected by online travel companies such as Hotels.com, Expedia, Orbitz, Priceline, and Travelocity.
Attorneys from McKool Smith argued that the city was owed the additional revenue because the online travel companies pay taxes only on the wholesale price of a hotel room booking, but collect and retain taxes on the higher, retail price. The defendant companies are required to pay the city based on rooms booked through their sites between the years 2000 and 2008 in Anaheim.
After a two-week evidentiary hearing, the Hearing Officer found that the online travel companies were both "operators" and "managing agents" as defined by the city’s ordinance, which is key in establishing their responsibility and liability.
The Anaheim ruling was issued on February 6 . The online travel company defendants, which have filed an appeal, must pay the cash award as a condition to their right to appeal the ruling.
Karen
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