California: Ruling on Online Booking Tax overturned

A Los Angeles Superior Court judge has overturned an earlier ruling that would have given the city of Anaheim $21.3 million in back taxes and penalties from online travel companies such as Expedia and Travelocity. (See posting of Feb. 20, 2009)The city in 2007 had sued the online travel companies for a larger share of hotel-bed fees – so-called transient occupancy taxes – collected through online booking. The law suit was based on the argument that he online companies were collecting taxes from customers on the retail price of hotel rooms, but only paying the city the tax on the wholesale price. However, superior court agreed with the defendants that the plain meaning of this type of occupancy tax stature simply did not cover online-travel companies.The ruling in the Anaheim case is likely to set a precedent for several similar cases.Source: The Orange County Register; find article here>>.

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