Online travel companies have won another round in their fight against cities and states trying to hit them with back taxes on hotel rooms they have sold.
In the first California court decision on the matter, a Los Angeles Superior Court judge on Monday dismissed the city of Anaheim's claims that online travel companies like Priceline, Expedia, Travelocity and Orbitz owe $21 million.
"The issue at the heart of this case is simple: Because online travel companies do not own, manage or operate hotels, they are not liable for hotel occupancy taxes," said Darrel Hieber, a partner with the law firm of Skadden Arps partner, who represented the OTAs.
The heart of the dispute focuses on whether OTAs owe taxes on markups (the difference between what they pay a hotel company for a room and the amount of money they collect when they sell the room).
According to Hieber, the court is the eighth in the nation to dismiss attempts to claim back taxes on those markups, including two federal appellate courts.
In a ninth case, a court in San Antonio recently ruled that the online companies do, in effect, control hotels. The OTAs plan to appeal that decision.
