Texas judge backs cities in OTA tax dispute, Illinois cities seek payments

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A Texas judge ruled in favor of municipalities seeking additional hotel-tax payments from online travel agencies, while a handful of Illinois communities near Chicago are seeking a similar outcome.

U.S. District Judge Orlando Garcia, ruling on a class-action case first filed in May 2008, said Expedia, Priceline, Orbitz and Travelocity are among OTAs that owe 172 Texas cities — including Dallas, Austin and San Antonio — more than $55 million in back taxes, according to the Dallas Morning News.

The Travel Technology Association, a trade group representing the OTAs, said it would appeal the decision.

“This was a decision rendered over three years ago, and since then other Texas courts that have considered this issue have found the [online travel agencies] not liable,” said Travel Tech . “Given the previous rulings in Texas in our favor, we feel confident that the Federal Fifth Circuit will reverse Judge Garcia’s decision as it is inconsistent with Texas law as defined by the Texas appellate court. “

Meanwhile, a handful of Illinois communities just west of Chicago may file suit against the OTAs (not including Orbitz, which is based in the state) seeking what they say are underpaid hotel taxes during the past decade, according to the Chicago Tribune.

The back-tax total for towns such as Warrenville, Bedford Park and Oakbrook Terrace may amount to as much as $150 million, the newspaper said, citing Tom Prindable, managing partner of Chicago-based Clifford Law Offices, which represents some of the communities.

During the past few years, more than two dozen municipalities have taken on the OTAs in court over hotel taxes. In most of the cases, rulings have favored OTAs.

Follow Danny King on Twitter @dktravelweekly. 

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