by Elizabeth Cole March 23rd, 2011
The local government of the US capital is suing a number of online travel firms for unpaid taxes.
Following similar lawsuits from other US localities including San Antonio, Texas and San Diego, California, DC officials said on Tuesday that the city hopes to recover millions of tax dollars from online hotel bookings. The suit involves a number of popular online travel firms including Expedia, Travelocity, Priceline and Orbitz.
The announcement came via the city’s mayor Vincent C. Gray just ahead of the busy spring travel season when cherry blossoms and warmer temperatures begin bring in a large portion of the $5.2 billion spent each year by tourists. The exact dollar amount of alleged lost income has not been released, however officials say that it would likely range between $4 million and $10 million.
The news comes after more than 200 municipalities around the United States have targeted online firms over allegations that they’ve been pocketing millions in hotel taxes. Plaintiffs say that online agents are charging retail tax rates to consumers but in turn are only paying local governments amounts based on wholesale rates and are simply pocketing the difference.
Washington’s lawsuit follows newly passed legislation to ensure the DC Council seeks out ways to fill major gaps and plug loopholes in its fiscal 2011/2012 budgets.