February 2, 2010 / 1:42 AM / 9 years ago

Travel Web sites win rollback of additional taxes

LOS ANGELES (Reuters) - Online travel companies on Monday won the first of several pending legal battles to roll back tax assessments by California cities that claim they owe tens of millions of dollars in occupancy taxes.

Los Angeles County Superior Court Judge Carolyn Kuhl granted a request by Priceline.com Inc, Expedia Inc, Trip Network Inc, Orbitz LLC and Travelocity.com LP, Hotels.com LP and Hotwire Inc to invalidate $21.3 million in taxes, interest and penalties assessed by the city of Anaheim over the past nine years.

The companies had argued that they are not liable for the 15-percent hotel occupancy taxes because they do not operate hotels, and their fees cannot be considered “rent” under the tax law.

The decision has bearing on similar cases pending — some before Kuhl — or being considered by municipalities around the state that could add up to hundreds of millions in back taxes and future city revenue.

Kuhl ruled that the Anaheim hearing officer had erred in determining the online travel companies were hotel operators and that the fees they charged for reselling rooms were subject to the occupancy tax, her order filed on Monday showed.

Similar cases are pending in Los Angeles, San Diego and San Francisco, and eight other courts around the country have ruled in favor of the travel companies, attorney Darrel Hieber, who argued the case for the companies, said.

“We believe it shows a growing consensus that these types of claims lack support in law or fact,” Hieber, of Skadden Arps, said.

The case is Transient Occupancy Tax Cases, Case No. JCCP4472, Los Angeles County Superior Court. (Reporting by Gina Keating; Editing by Bernard Orr)

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