Travel Agencies Sued by Washington DC Officials

On Tuesday, attorneys in Washington DC filed a lawsuit against online travel companies, alleging the firms owe the city millions of dollars a year in sales taxes they aren’t paying. The companies involved in the suit are Priceline, Expedia, Travelocity and Orbitz. This lawsuit is similar to over 40 others still pending around the country, while other cities have had mixed success in cases already decided.

The District of Columbia lawyers contend that the travel agencies charge customers hotel taxes on the full price of a room, but they only return tax to the city based on the cheaper rate they bought the room for. There were more than 16 million visitors to Washington DC in 2009, while overnight visitors stayed for 3 nights on average.

Acting Attorney General Irvin Nathan says they have studied the other lawsuits that have been decided and believes they can win. These firms owe tens of million plus interest for taxes that date back to 1998, adding up to between $4 and $10 million a year. Nathan added that his firm will be vigorously opposed by the online travel agencies, who have some of the best lawyers in the country to litigate the matter.

The Interactive Travel Services Association (ITSA) is a trade group that is representing the travel companies. Spokesman Andrew Weinstein says that the association is disappointed that the nation’s capital would choose to chase a trivial case in this area when the overwhelming majority of courts throughout the country have ruled in favor of the online firms due to merits and facts, he added.