July 25 2006
Online travel services are accused in a class action lawsuit of shirking their obligation to pay taxes on the portion of the room rate they collect. The lawsuit cites an Orange municipal law mandating that each entity "owning, operating, managing or controlling any hotel or motel ... within the City of Orange, Texas, shall collect the tax imposed." The suit asks that online travel agencies pay up hotel occupancy taxes on their share of the revenue from booking rooms. The City of Orange alleges that online companies contract with hotels for rooms, and set prices and cancellation policies; therefore they must collect and pay the occupancy tax to the city "on the retail amount of the price paid for the room by the occupants."
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