Cities do it. Counties do it. Now, states are doing it, too. Suing online travel agencies over hotel taxes, it seems, has become a national pastime.

In each case, these government entities have sued one or more online travel agencies, arguing that the OTAs have failed to collect or remit the appropriate level of taxes on rooms sold when using the merchant business model.

The suits seek not only to recover back taxes but also to ensure that, going forward, OTAs collect and remit taxes at higher levels. This type of litigation has become so popular and profitable that some law firms have developed entire practice divisions around it, aggressively soliciting business from tax districts around the country.

This month, Florida raised the stakes considerably when it became the first state to go to court on the matter, filing suit against Expedia and Orbitz.

Under the merchant model, the OTAs negotiate for hotel rooms at discounted net prices based on volume, then add their markups and sell the rooms.

The crux of their dispute with tax authorities is that the OTAs remit taxes on the amount they pay the hotels for the rooms, not on the amount the consumer pays. Local governments contend that the OTAs should pay occupancy taxes based on the full retail rate paid by the consumer.

Following some unfavorable court rulings, OTAs have abandoned the merchant model in some jurisdictions, shifting instead to far less lucrative commissioned sales in those destinations. In the end, however, the vast majority of their business is still done on the merchant model.

But should Florida prevail in its suit, the OTAs would take a major hit, because they would be forced to sell hotel inventory throughout a top tourist state on a commission basis only.

On the other hand, taxing authorities haven’t won many decisions, and it remains to be seen if Florida will fare any better.

The Interactive Travel Services Association, a trade group of OTAs, estimated there were "several dozen" similar lawsuits in the courts now, and more than 15 have been dismissed. Generally, the OTAs have prevailed, and when that does not happen, they have routinely appealed.

At the federal level there have been six decisions, said ITSA spokesman Andrew Weinstein. The online agencies won five federal cases, which is important for precedent-setting purposes, he said.

The single reversal occurred late last month when 173 Texas towns and cities, led by San Antonio, won a jury verdict of $20.6 million against 11 companies. However, the jury declined to impose punitive damages.

Weinstein said the Texas decision would be appealed.

"We believe the law is on our side," he said. "If a company is not a hotel, it shouldn’t have to pay hotel taxes."

He said it was a "pervasive myth" that the OTAs purchase blocks of hotel rooms for resale when employing the merchant business model. He said the OTAs "don’t buy or manage inventory. They are strictly acting the role of intermediaries."

Florida’s attorney general, Bill McCollum, sued Expedia and Orbitz under the Florida Deceptive and Unfair Trade Practices Act, which provides that it is unlawful to engage in "unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce."

In the Circuit Court for Leon County, Fla., the attorney general argued that the defendants, in public filings at the Securities and Exchange Commission and elsewhere, admit they remit taxes based on the wholesale rate paid by the OTAs to the hoteliers rather than on the retail rate paid by the customer, "thereby depriving the state of Florida the millions of dollars in taxes to which it is entitled."

The attorney general further argued that the state’s 6% hotel tax was meant to be levied on the rate paid by the consumer, and he asserted that the defendants have "willfully engaged in unconscionable acts or practices and/or willfully committed acts or practices that offend established public policy."

He asked the court to declare the defendants to be in violation of the Deceptive and Unfair Trade Practices Act when they use the merchant model but don’t collect "applicable taxes."

Weinstein said Florida’s court papers, like many others, erroneously claim that the OTAs purchase inventories of rooms.

He said the state’s press announcement also erroneously gave the impression that the OTAs were collecting taxes on the retail price but only remitting a portion of taxes owed to the state. Weinstein said this was another fallacy — that OTAs are collecting more taxes than they remit.

Coincidentally, on the same day the state filed, six Florida counties joined the plaintiff ranks, filing suit against several OTAs. They, too, targeted the merchant model, but they took a different approach to the issues.

Ed Dion, attorney for the plaintiffs, said his group had not expected the state to go to court. In any case, he said that the counties (Flagler, Lee, Leon, Manatee, Pinellas and Polk) were more focused on recovering back taxes from the defendants.

Those defendants are the "Expedia defendants" (Expedia, Hotels.com, Hotwire and TravelNow.com), the "Orbitz defendants" (Orbitz and Trip Network, dba Cheap Tickets), the "Priceline defendants" (Priceline.com and Travelweb) and the "Travelocity defendants" (Sabre Holdings and Travelocity.com).

The six-county suit, also filed in Circuit Court in Leon County, asks the court to declare the OTAs "dealers" under state law, require them to register as dealers with the Florida Department of Revenue and require that they collect room taxes based on the retail prices.

It also asked the court to declare that each defendant owes back taxes to the six counties based on the difference between rates collected on wholesale prices and rates that would have been collected on retail prices paid by consumers, without any statute of limitations.

Finally, it asked the court to determine how much is owed to each county.

When asked if OTAs have options for curtailing the endless string of repetitive lawsuits, Weinstein said that "new legislation is a possibility" to clarify how hotel room taxes should be calculated and collected.

He said this would only be practical either at the state or federal levels, because there would be too many jurisdictions to deal with at city and county levels.

However, he added that it is "too early to offer an outline of what a law might look like. It needs to be consistent and fair."