Allegations of Collecting Taxes and Treating them as Revenue
On October 5th, 2005 the city of Fairview Heights filed a class action lawsuit targeting businesses that operate web sites to assist in the booking of hotel accommodations, for failing to reimburse the city for certain taxes paid on gross receipts. The city is accusing the operators of many of these sites of charging consumers taxes based on retail room rates, while actually only paying taxes on the room's wholesale rate - allowing the booking agent to illegally pocket the difference as income.
Among the services names in the suit are such well known entities as Priceline.com, Orbitz, Hotel.com, Hotwire.com, Expedia, Travelnow.com, Travelocity.com, and others.
Filed in St. Clair County Court, the complaint alleges, "defendants have sold hotel rooms to the public and collected taxes on those rooms, but failed to pay the taxes due and owing to the City of Fairview Heights and other class members on these transactions."
As stated in the complaint, the defendants contract with hotels for rooms and sell the rooms to members of the public and charge and collect taxes from occupants based on the retail or marked up rooms rates, but only remit taxes based on the lower discounted rate, illegally retaining the difference.
According to the complaint filed, "All taxing authorities in the State of Illinois authorized to impose a tax upon persons engaging in the business of renting, leasing or letting rooms in a hotel or motel on the gross rental receipts from such renting, leasing or letting," are eligible to join the class.
Logic dictates that this kind of behavior was not limited to simply the city of Fairview Heights or the State of Illinois. This filing probably represents the tip of the iceberg, and for those attorneys who represent municipalities, counties and state taxing authorities in civil matters this matter is clearly an emerging issue that involves an enormous number of taxing agencies that have been shorted on taxes collected under their rules and policies.
Register your Internet Hotel Reservation Services ComplaintIf you have been charged taxes while booking a hotel online, you may qualify for damages or remedies that may be awarded in a possible class action lawsuit. Please fill in our form on the right to submit your complaint and we will have a lawyer review your Internet Hotel Reservation Services complaint.
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