Los Angeles City Attorney Rocky Delgadillo has filed suit against a dozen hotel booking service Web sites including Hotels.com, Priceline.com and Travelocity.com, alleging they've failed to pay as much as $10 million a year in occupancy taxes to the city.
In a lawsuit filed Tuesday in Los Angeles Superior Court, the city claims online hotel operators are collecting taxes and fees from hotels guests but are not passing the full amount through to the city.
The city is seeking class action status for the lawsuit, which could affect nearly 100 cities and counties in California. Los Angeles charges a 14 percent per-night fee, known as a transient occupancy tax, which generates millions of dollars annually for the city's general fund. The city is seeking damages dating back to 1999.
The lawsuit claims the online hotel room resellers are remitting taxes based on discounted hotel rates even though they are collecting taxes based on marked-up room rates and pocketing the difference. For instance, the reseller may charge a customer $100 for a room and add a $14 tax. But it only passes $9.80 of the tax charge through to the city, because the room only cost the reseller $70.
Other defendants include Hotwire Inc., Cheap Tickets Inc., Cendant Travel Distribution Services Group Inc., Expedia Inc., Lowestfare.com Inc., Orbitz Inc., Travelweb LLC, and Travelnow.com Inc.
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