City wins $21.2M in tax revenues from online travel companies

By City News Service

The city of San Diego was awarded $21.2 million in a lawsuit against a group of online travel companies accused of failing to pay hotel occupancy taxes for online hotel bookings, it was announced Wednesday.

The ruling bolsters the cases of more than 275 other municipalities and public entities around the country whose tax revenues have been cut due to online travel companies - such as, Expedia, Orbitz, Priceline and Travelocity - failing to remit the proper amount of hotel occupancy taxes, said Russell Budd of the law firm Baron & Budd.

Attorney Thomas Sims and other counsel argued at a hearing earlier this year that San Diego is owed taxes, penalties and interest because the online travel companies collected taxes on the retail price of hotel rooms, but only remitted taxes on the wholesale price and kept the difference.

A hearing officer ruled that the online travel companies owe San Diego just over $17 million in taxes and $4.25 million in penalties, Budd said.

Baron & Budd filed the first case seeking hotel occupancy taxes from online travel companies in 2004 on behalf of the city of Los Angeles and a class of other California cities.

It currently represents 41 cities, including San Diego, Santa Monica, Anaheim and San Antonio.